One of the important highlights of the Union Budget 2022-23 presented in Parliament by Union Finance Minister Nirmala Sitharaman was the announcement about the introduction of “Digital Rupee”. Introduction of Central Bank Digital Currency (CBDC) will give a big boost to digital economy. “Digital currency will also lead to a more efficient and cheaper currency management system. 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,” said the FM in her Budget speech.
The Finance Minister also announced that income from digital asset transfers would be taxed at a rate of 30%. The move is being seen as “crypto tax” and gifts received in the form of cryptocurrencies are likely to be taxed at the same rate. “I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30%. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of ac
quisition,” Sitharaman said. Further, loss from the transfer of virtual digital assets cannot be set off against any other income, she added.
The Finance Minister also announced the imposition of 1% TDS on payment made in relation to the transfer of virtual digital assets. The move is aimed to capture the transaction details in digital currency. “Gift of virtual digital asset is also proposed to be taxed in the hands of the recipient,” the Finance Minister said.
Replying to a question in the post-budget media briefing, Sitharaman clarified that the proposed tax would be levied on any income from the digital assets and the government has not taken any stand on the legality of cryptocurrencies per se. “We are not taxing currency that’s yet to be issued. Cryptocurrencies are not currencies. RBI is going to issue its digital currency, everything outside is assets created by individuals,” she said.
While talking to a news agency, Union Commerce and Industry Minister Piyush Goyal said that the digital currency issued by Reserve Bank of India (RBI) would be official and legal tender, and that the government would not recognise private cryptocurrencies as legal tenders.
Referring to cryptocurrency, Goyal said that the Union Budget states that income from the transfer of any virtual digital asset shall be taxed at a rate of 30%. “The digital currency issued by the Reserve Bank of India (RBI) 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 that are evolving in the world. The government does not recognise private cryptocurrencies as legal tenders. If people keep those as assets they can but there will be a 30% tax on them,” Goyal said.