India wants to develop digital rupee and tax more cryptocurrencies

India wants to have its own digital currency within two years. The country wants to issue a Digital Rupee through the country’s central bank. India also wants to impose a 30 percent tax on all forms of cryptocurrencies.

India’s finance minister Nirmala Sitharaman mentions that plan during the presentation of the budget for the coming year. In it, she says that India’s central bank should come out with a Digital Rupee, a digital variant of the country’s national currency, sometime during the financial year. India’s fiscal year starts on April 1. So the coin should come out in 2022 or early 2023. Sitharaman does not provide many details about how the coin should look like or how it should work in practice. She says it will run on a blockchain and that the idea behind it is that a digital currency could be “a big boost” for the digital economy in the country.

The minister also proposes to levy more taxes on cryptocurrencies and other digital assets. In an accompanying memo, Sitharaman says the country wants a 30 percent flat tax on all cryptocurrency income. In addition, a one percent tax would be levied on all cryptocurrency sales. Other crypto assets, such as NFTs, would also become tax-heavy. The tax is higher than India’s 15 percent levy on property income, but still better than a complete ban on cryptocurrency. Investors were hesitant because there had been rumors for some time that India would like to ban cryptocurrencies altogether.

India is not the first country to want its own digital currency. The Chinese central bank is already conducting extensive experiments with a Digital Yuan. Other countries, including Nigeria, the Bahamas, Grenada and some Caribbean islands already have their own currency. Japan and the United States are exploring the possibilities, and Europe has already indicated that it will develop a digital euro.