India to Launch Digital Rupee in 2024 Financial Year

Indian finance minister, Nirmala Sitharaman, announced yesterday that the Reserve Bank of India (RBI) has settled to issue a central bank digital currency (CBDC) in the new financial year. The minister made the revelation at the 2022 budget presentation in Parliament on February 1.

Asserting that the “Introduction of central bank digital currency (CBDC) will give a big boost to the digital economy” and “Digital currency will also lead to a more efficient and cheaper currency management system,” Sitharaman noted:

“It is, therefore, proposed to introduce digital rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23.”

Shortly after the finance minister’s statement, Union Commerce and Industry Minister Piyush Goyal explained at an interview with ANI publication:

“The digital currency issued by the Reserve Bank of India will be the official and legal tender. RBI will issue this official digital currency so that India does not lag behind as new technologies like blockchain and others are evolving in the world.

The government does not recognize private cryptocurrencies as legal tender. If people keep those as assets, they can, but there will be a 30% tax on them.”

The Indian government classifies all non-government-issued cryptos as “private” cryptocurrencies.

India to Tax Cryptocurrency-Related Income by 30%

At the budget presentation yesterday, Sitharaman also pitched her opinion on taxing income from cryptocurrency transactions at 30%. The minister noted: “No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition.”

More and more central banks continue to join the central bank-issued digital currency bandwagon, with the Atlantic Council’s central bank digital currency tracker noting that 87 countries are now working on a CBDC.

That said, the RBI would become the first large economy central bank to release a CBDC if it launches its proposed digital rupee in the coming financial year.