May 23, 2022

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India announces taxes on digital rupee formation and cryptocurrencies | Markets

India on Tuesday announced key measures to boost its digital economy, including the creation of a digital rupee to facilitate currency management and the use of a 30% tax on the transaction of virtual digital assets such as cryptocurrencies and NFTs. , Reverses their previous policy.

Today, Finance Minister Nirmala Sitharaman presented the Commonwealth Budgets for the next fiscal, beginning in April this year and ending in March 2023.

Sitharaman said the Reserve Bank of India (RBI) will issue this digital rupee in the financial year 2022-2023, which will “give a major impetus to the digital economy and lead the management system to a more efficient and economical currency” through blockchain technology.

Unlike other cryptocurrencies, the future Indian currency will not depend on any central bank and will follow the rules established by the RBI and its value will be equal to the real rupee. Currently, many Caribbean countries and Nigeria are the only ones that have officially approved this payment method through the virtual version of their currency. Other countries, such as China, have launched pilot programs to test the effectiveness of this practice.

When announcing the bill to regulate private cryptocurrencies in India, while at the same time creating the legal framework for the creation of digital currency issued by the Central Bank, the present Government of India has already expressed interest in creating digital currency.

Although it was planned to be discussed in the winter session of Parliament between November and December 2021, it was a move that had not yet been highlighted.

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The executive also announced today that in an effort to curb the operation of private cryptocurrencies in the country, cryptocurrencies and NFTs will introduce a 30% tax on transactions of structured virtual digital assets.

“I propose to levy 30% tax on any proceeds from the conversion of any virtual digital property. No deduction will be allowed in respect of any cost or payment in calculating such income other than the cost of acquisition,” Sitharaman said.

In 2019, the current government attempted to introduce a draft law banning digital currencies that carry up to ten years in prison for possession, use or mining of cryptocurrencies.

But in May 2020, the Supreme Court of India ruled that blocking RBI cryptocurrencies was illegal and asked the government to regulate this gray section of Indian law.