On 1st February India’s Finance Minister Nirmala Sitharaman, mentioned in her speech about India’s budget for 2022-2023, the “phenomenal increase in transactions in virtual digital assets.”. With India’s exponential growth of crypto transactions the past year, the government's attention to it was expected. In her speech she proposed 30% taxation on any income from the transfer of digital assets, and also introduced 1% of tax deduction at source for every transaction made beyond a threshold limit. If any losses are made however, no deductions can be made as the “loss from transfer of virtual digital assets cannot be set off against any other income.” according to the budget proposal.
Finance Minister Sitharaman also proposed that the reserve bank would come up with a new digital rupee by 2022-2023. The CBDC (Central Bank Digital Currency) would be powered by the blockchain technology once it begins trading and will remain permanent. Sitharaman said that the introduction of the digital rupee “will give a big boost to digital economy,” and that “Digital currency will also lead to a more efficient and cheaper currency management system. “.
This is a big step away from The Cryptocurrency and Regulation of Official Digital Currency Bill, that from previously published texts we have understood it was planned to “ban most private cryptocurrencies” except for certain assets meant to promote the “underlying technology of cryptocurrency and its uses”.
This government proposal shows a big shift in how the government views cryptocurrency and its legitimacy. Instead of banning cryptocurrency, their outlook on crypto assets seems to have shifted to the regulation of it instead, enabling the legal investments and usage of crypto to billions of people. This is an interesting change of expected events and it might even lead to more countries considering the exploration of CBDCs.
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