On 1 February 2022, during her presentation of India's proposed budget for 2022-23, Minister for Finance and Corporate Affairs Nimala Sitharaman announced a proposal to introduce a Digital Rupee using blockchain and other technologies. The Digital Rupee would be issued by the Reserve Bank of India starting 2022-23. Minister Sitharaman explained that the introduction of a Central Bank Digital Currency (CBDC) would give a big boost to the country's digital economy and lead to a more efficient and cheaper currency management system. The idea of a virtual currency for India has been under consideration for some time.
In addition to the Digital Rupee, Minister Sitharaman's speech to Parliament outlined a proposal for a 30% tax on virtual digital assets. The proposed budget would also allow taxpayers to file updated returns to correct errors and pay additional tax due to encourage voluntary tax compliance. It included other income and tax initiatives, such as the equalization of the income tax deduction for pension contributions by the central government and state governments on behalf of their employees.
Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association.