On Tuesday, India's Ministry of Finance announced the Reserve Bank of India is set to launch its central bank digital currency (CBDC) using the blockchain technology. Such a move could put India ahead of many countries.
Furthermore, an income tax of 30% will be levied on capital gains made from the transfer of virtual digital assets, finance minister Nirmala Sitharaman told the Indian parliament on Tuesday. "No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition," Sitharaman added.
In October 2021, the Reserve Bank of India sent the Ministry of Finance a proposal on amending India's Reserve Bank of India Act 1934. The amendments would allow digital currencies to be recognized as banknotes.
Pankaj Chaudhary, minister of state in the Ministry of Finance, told The Times of India that details of a phased introduction of the CBDC are still being worked on.
The minister added that possible risks also have to be weighed up against the benefits. India's central bank, like others around the world, has regularly warned of the potential hazards of investing and trading digital currencies.
In January, the Federal Reserve published a white paper listing the pros and cons of a digital USD and a CBDC. The regulator stated that it could start working on it with support from the government. Russia's central bank recently recommended more tighter regulation of cryptocurrency activity and mining. China banned all crypto activity last year.
While many countries are researching CBDCs, only two countries have launched their digital currencies - the Bahamas and Nigeria.
Despite its crackdown on cryptocurrencies, China appears to be far ahead of other countries with a digital yuan, with test runs being conducted in several regions since late 2020, as well as plans announced late last year to connect a CBDC with payment apps.
