The Finance Ministry has said that digital assets other than digital currency issued by the Reserve Bank of India (RBI) will “never become legal tender”. Addressing a press conference, Finance Secretary TV Somanathan said that while people can buy cryptocurrencies, the asset will not have a price authorisation by the government. Bitcoin, Ethereum or NFTs will never become legal tender.
“Bitcoin, Ethereum or NFT will never become legal tender. Crypto assets are assets whose value will be determined between two people. You can buy gold, diamond, crypto, but that will have not have the value authorisation by government,” the finance secretary said.
Somanathan discouraged investment in crypto assets, saying, “There is no guarantee whether your investment will be successful or not”. “One may suffer losses and the government is not responsible for this,” he stressed.
Nirmala Sitharaman on Digital Rupee and Crypto Taxation
To give a boost to the Indian economy, the Reserve Bank of India will issue a digital rupee using blockchain and other technologies in the financial year 2022-23, said Finance Minister Nirmala Sitharaman in her budget speech.
The finance minister also announced that the income from the transfer of any virtual digital asset will attract a tax of 30 percent. It said, “No deduction shall be allowed in respect of any expenditure or allowance while computing such income except the cost of acquisition.”
Sitharaman said loss arising from the transfer of virtual digital assets cannot be set off against any other income. It was also announced to levy 1% TDS on payments made in respect of the transfer of virtual digital assets.
Meanwhile, Prime Minister Narendra Modi on Wednesday said the Digital Rupee, proposed in the Union Budget, will open up “new opportunities” in the fintech sector. “Central Bank Digital Currency (CBDC) will strengthen the digital economy… If someone pays in digital currency, you will be able to convert it into cash,” he said while addressing the seminar Aatmanirbhar Economics.