Digital Currency Will Be Backed By RBI, But Not Bitcoin, Ethereum or NFT, Says Finance Ministry

According to the finance ministry, Crypto is a speculative transaction, so the government is taxing it at a 30% rate.

New Delhi: The Union Ministry of Finance on Wednesday said the digital currency issued by the Reserve Bank of India (RBI) will be backed by the Central government and it will be a legal tender, but not other private cryptos such as Bitcoin or NFT.

“The digital currency will be backed by the RBI which will never be default. 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,” Finance Secretary TV Somanathan said.

Giving details, Somanathan said people who are investing in private crypto should understand that it does not have the authorisation of the government and there is no guarantee whether their investment will be successful or not and the government is not responsible if people suffer losses.

Digital currency will be backed by RBI which will never be default. 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:Finance Secy TV Somanathan

(File pic) pic.twitter.com/Cko0e4753X

— ANI (@ANI) February 2, 2022

“People investing in private crypto should understand that it does not have the authorisation of govt. There is no guarantee whether your investment will be successful or not, one may suffer losses and govt is not responsible for this,” Somanathan said.

He added that the Bitcoin, Ethereum or NFT will never become legal tender. “Crypto assets are assets whose value will be determined between two people. You can buy gold, diamond, crypto, but that will have not have the value authorization by the government,” Somanathan stated.

He also added that the government policy is except agriculture all other income is taxable. “Currently, we don’t have clarity on cryptocurrency, if it’s business income, capital gain or speculative income. Some people declare their crypto assets, some don’t. Now uniform rate will be 30% tax,” he added.

According to the finance ministry, Crypto is a speculative transaction, so the government is taxing it at a 30% rate.

“Crypto is a speculative transaction, so we are taxing it at a 30% rate. No one knows the real value of Ethereum. Their rate daily fluctuates. One who earns income through crypto will have to now pay 30%. This is the new policy of the government,” he added.

He said that the policy of the government is not only for crypto, this is for all speculative income. “For example, if I take horse racing, that also attracts 30% tax. There is already a 30% tax on any speculative transaction. So we have decided to tax crypto at the same rate,” Somanathan said.

On Tuesday, the Central government in the Budget 2022-23 announced that India will have its own digital currency soon and it will be issued by the Reserve Bank of India (RBI) in 2022-23 using blockchain technology.

Giving details, Finance Minister Nirmala Sitharaman in her Budget 2022 announcement had proposed a 30 per cent tax on digital assets.

“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 shall be allowed while computing such income, except the cost of acquisition,” the FM had said.