Financial Minister Nirmala Sitharaman, on February 1, presented the Union Budget 2022-23 worth Rs 39.45 lakh crore, which would be used in many new sectors such as Gaming and Mental health, and in enhancing the existing ones such as Education and Farming. Among these announcements, what has emerged as a hot topic among the public is the future of cryptocurrencies. In her speech, Finance Minister Sitharaman had announced that the Centre would impose a 30% tax on cryptocurrencies, and she also introduced the digital currency to be issued by the Reserve Bank of India (RBI).
Bitcoin, NFTs will ‘never become a legal tender’: Sitharaman
Clearing the air around the Centre’s stance on cryptocurrencies, Nirmala Sitharaman, in her latest statement on February 2, has clarified that cryptocurrencies such as Bitcoin, Ethereum and Non-fungible tokens (NFTs) will never become legal tender. She said that for any currency to be considered a legal tender, it must be issued by the RBI, even if it is a cryptocurrency. It is worth noting that the Centre is repeatedly calling these cryptocurrencies “digital assets”, which makes them taxable.
Talking about the Digital Rupee, the Finance Minister had said, “Digital rupee to be issued using blockchain and other technologies; to be issued by RBI starting 2022-23. This will give a big boost to the economy.”
PM Modi speaks on India’s digital economy
While addressing a conclave on Atmanirbhar Arthvyavastha on February 2, PM Modi said that this year’s Budget will play a big role in boosting India’s digital economy. “This digital rupee, just like the existing physical currency, will be controlled, monitored and expanded by the RBI.” Stating that this form of payment, unlike cryptocurrencies will be safer, PM Modi added that it will help in the development of the Global Digital Payment System.
Piyush Goyal on cryptocurrency in India
Union Commerce and Industry Minister Piyush Goyal, in an interview with ANI, said that India does not recognise cryptocurrencies as legal tender but is taking steps towards adopting blockchain technology. Talking about cryptocurrency tax, he said, “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 will be allowed.”
Ashwini Vaishnaw explains Digital Rupee concept in layman’s terms
When asked about the concept of the digital rupee in layman’s terms, Union Minister Ashwini Vaishnaw, in an exclusive interview with Republic Media Network’s Editor-in-Chief Arnab Goswami, said that a digital rupee is basically a currency that would be issued in a digital form by the Central bank of the country. Stating that almost 80 countries today are exploring and have developed pilot projects of issuing digital currency, he also answered if they should be public or private, like cryptocurrencies.
“I would very humbly say that the monetary policy, the fiscal policy, the ability to manage foreign exchange…(and) balance of payments, all these things are core government functions. So that’s why it is very important the RBI issues the digital rupee. This will be very much akin to digital payments we are used to and the underlying technology will be very reliable, robust and user friendly,” he added.
Crypto does not have govt authorisation, says Finance Secretary
Concurring with Sitharaman’s statement on digital assets, and RBI’s digital rupee, Finance Secretary T.V. Somanathan said-
Money will be of RBI but the nature will be digital. Digital rupee issued by RBI will be a legal tender. Rest all aren’t legal tender, will not, will never become legal tender.
“People investing in private crypto should understand that it does not have the authorisation of government,” he added.