Govt does not recognize private cryptocurrency as legal tender, digital rupee will be issued by RBI: Piyush Goyal

New Delhi, February 1: Noting that digital currency to be issued by the Reserve Bank of India (RBI) will be official and legal tender, Union Commerce and Industry Minister Piyush Goyal on Tuesday said the government does not recognize private cryptocurrencies as legal tenders and is taking steps so that India does not lag behind in new technologies like blockchain.

Referring to cryptocurrency, Goyal said that the union budget presented in parliament on Tuesday states that income from the transfer of any virtual digital asset shall be taxed at a rate of 30 per cent.

“The digital currency issued by the Reserve Bank of India (RBI) will be the official and legal tender. RBI will issue this official digital currency so that India does not lag behind as new technologies like blockchain and others that are evolving in the world. The government does not recognize private cryptocurrencies as legal tenders. If people keep those as assets they can but there will be a 30 per cent tax on them,” Goyal told ANI in an interview.

Union Finance Minister Nirmala Sitharaman announced in her budget speech that income from digital asset transfers will be taxed at a rate of 30 per cent.

The move is being seen as ‘crypto tax’ and gifts received in the form of cryptocurrencies are likely to be taxed at the same rate. Cryptocurrencies gifts are would also be taxed at the receiver’s end.

“I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition,” Sitharaman said.

The Finance Minister also announced that the Reserve Bank of India will issue a Digital Rupee in the next financial year.

In order to regulate the digital assets market, the government had proposed to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the Winter Session of Parliament. However, the Bill was not tabled with the government deciding to have more consultations.

Sitharaman said Central Bank Digital Currency (CBDC) will give a big boost to the digital economy. The minister said the digital currency will also lead to a more efficient and cheaper currency management system and it will use blockchain and other technologies.