Union Budget 2022: Forget Bitcoin, RBI to launch new Digital Rupee this year

Union Budget 2022-23: The Indian government has finally opened up about the development of its own digital currency based on the blockchain after a lot of speculation and reports. Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2022-23, announced that the Reserve Bank of India (RBI) will issue a digital rupee later this year.

India’s Digital Currency

Digital Rupee will be issued using blockchain and other technologies. According to Sitharaman, it will provide a big boost to the digital economy. It will be a digital depiction of an Indian rupee supported by the RBI. This new digital currency will also be a “cheaper and efficient currency management system.”

The rollout plan for the digital rupee is still under wraps and will be disclosed later by RBI.

Note, we already are comfortable with using digital money, in terms of digital wallets where we can load our money using banks. This money is currently backed by actual currency, whereas, the new digital rupee will be a standalone entity managed by the RBI.

India is not the only country

India isn’t the only country looking to launch its own digital legal tender system, various other countries too have similar projects like the digital dollar, e-yuan, and digital euro.

The digital rupee will compete against other cryptocurrencies like Bitcoin, which do not seem to have the backing of a govt-issued currency, making them extremely volatile. But, the digital rupee will be stabilized by the Indian government. For all transactions, the digital rupee is equivalent to a physical rupee. However, here people may lose the anonymity they gain by using cryptocurrencies like Bitcoin.

Virtual digital assets to be taxed at 30 percent

Apart from this, in her fourth Budget in the Parliament Sitharaman also announced that any income from virtual digital assets will be taxed at 30 percent. Any losses incurred cannot be offset against other gains and gifts of virtual digital assets will be taxed in the hands of the recipient.

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