Digital rupee, e-passports and crypto tax all set to launch in India next fiscal year

India's finance minister said all cryptocurrency gains will be taxed 30%, including gifts.
Written by Campbell Kwan, Contributor

India's Finance Minister Nirmala Sitharaman speaking during the post-Budget press conference.

Image: Ganesh Chandra/SOPA Images/LightRocket via Getty Images

The Indian government has announced plans to launch a digital rupee to respond to the growing number of digital transactions being made in the country.

A digital currency "using blockchain and other technologies" is expected to be issued by the central bank in the next fiscal year, said Indian Finance Minister Nirmala Sitharaman, who unveiled India's annual budget in a speech [PDF] on Tuesday.

The central bank digital currency (CBDCs), alongside a slew of tech initiatives, were unveiled in Indian Budget 2022 as part of the government's "Amrit Kaal" blueprint, which is a 25-year digital transformation plan in lead up to India being independent for 100 years in 2047.

On virtual digital assets that are not CBDCs, Sitharaman said virtual digital assets like cryptocurrency would now be taxed at a 30% rate, even if those assets are received as gifts. As part of these regulations, India said there will be no deductions or offsets for losses available in respect to virtual digital assets.

With the Indian government announcing cryptocurrency regulation rather than a ban, Indian cryptocurrency exchanges CoinDCX and WazirX both tweeted their support for the budget movements.

"The budget is forward-looking and inspirational. It has touched key points that'll help us create modern, powerful, digital, and sustained growth … taxation of virtual digital assets or crypto is a step in the right direction. It gives much-needed clarity and confidence to the industry," CoinDCX tweeted.

WazirX founder Nischal Shetty shared a similar sentiment, saying in a tweet that the budget announcements effectively make virtual digital assets legal in India.

Looking beyond CBDCs and cryptocurrency, the government will also work with banks to set up 75 "digital banking units" across 75 districts to help Indian civilians transition towards using digital payments. The digital banking units will allow civilians to deposit money into their banking accounts without needing to visit a bank's branch, make online payments, and perform online banking activities.

Another key tech initiative announced in the budget was the rollout of e-passports "using embedded chip and futuristic technology" later this year.

The Indian government also confirmed that 5G services would be rolled out in fiscal year 2022-23 with another 5G spectrum auction also on the way this year. It added that plans are being made to make 5G connectivity available in remote areas sometime in 2025.

"All villages and their residents should have the same access to e-services, communication facilities, and digital resources as urban areas and their residents," Sitharaman said in her budget speech.

Other initiatives announced in the budget by the Indian government are the extension of tax incentives for startups until March 2023 in response to the pandemic, more funding for drone startups, the creation of a "digital university", a new centralised government procurement system that allows suppliers and contractors to submit digitally signed bills and claims, a new telehealth scheme, and a revamped national digital health ecosystem.

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