India’s finance minister has said the country will launch a digital version of the rupee this year. In her annual budget speech, Nirmala Sitharaman also outlined plans for a 30% tax on income from digital assets.
It would put profits from trading or transferring cryptocurrencies and non-fungible tokens into the highest tax bracket in the country. India is the latest major economy to announce an official virtual currency, as China tests the digital yuan.
The introduction of a central bank digital currency will give a boost, a big boost to (the) digital economy,” Ms Sitharaman said on Tuesday. Digital currency will also lead to a more efficient and cheaper currency management system,” he added.
Ms. Sitharaman also said that the magnitude and frequency of digital asset transactions “have made it imperative to establish a specific tax regime”, where profits from transactions are taxed. The tax would also apply to donations of digital assets, and the recipients would be responsible for paying the tax. Taxes for all other transactions would be deducted at source.
The announcement came as Ms Sitharaman released the annual budget of the Indian federal government. It included increased spending on infrastructure and extended loan guarantees for struggling small businesses. Asia’s third-largest economy has been hit hard by the pandemic with significant job losses and rising inflation.
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