What is Digital Rupee and when will it be issued?

Finance Minister Nirmala Sitharaman confirmed the issuance of a Digital Rupee by RBI this fiscal which will be based on blockchain and other technologies. The announcement comes amid increased demand for cryptocurrencies such as Bitcoin, Dogecoin, and Ripple.
What is Digital Rupee and when will it be issued? | Digital Currency in India
What is Digital Rupee and when will it be issued? | Digital Currency in India

Digital Currency in India: The first pilot for retail use of the digital rupee, or e-rupee, will begin on December 1, according to a statement from the Reserve Bank of India (RBI) on Tuesday. To begin with, the RBI has partnered with four banks State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank of major metro cities. According to RBI, the pilot would initially only apply to the closed user group (CUG), which consists of participating consumers and retailers.

During her 2022 Budget speech on February 1, Finance Minister Nirmala Sitharaman confirmed the issuance of a Digital Rupee which will be based on blockchain and other technologies. She, however, has not made any announcement regarding the ban or legality of other cryptocurrencies. 

The announcement comes at a time when there is an increased demand for cryptocurrencies such as Bitcoin, Dogecoin, and Ripple. 

What is Digital Rupee?

Digital Rupee is the digital version of the fiat currency-- the Indian Rupee. It is similar to a fiat currency which is issued on paper and is interchangeable with any other fiat currency. 

Digital Rupee: All you need to know.

Who will issue the Digital Rupee and when?

The Digital Rupee will be issued by the Reserve Bank of India (RBI) this fiscal. Finance Minister Nirmala Sitharaman said, "It is therefore proposed to introduce a digital rupee using blockchain and other technologies, to be issued by the Reserve Bank of India, starting 2022-23,” the FM Sitharaman said.

Also Read | CBDC in India: What is Central Bank Digital Currency (CBDC)?

What is the significance of the Digital Rupee?

With the introduction of Central Bank Digital Currency (CBDC), India's digital economy will significantly boost. “Central Bank Digital Currency (CBDC) will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system,” the FM Sitharaman said.

Earlier in October 2021, the Reserve Bank of India (RBI) received the nod for an amendment to the Reserve Bank of India Act, 1934 to enhance the scope of the definition of 'bank note' to include currency in digital form. 

How much tax will be levied on cryptocurrencies?

Finance Minister Nirmala Sitharaman further announced the introduction of a new crypto tax under which virtual digital assets will be taxed at 30% in the country.

Furthermore, no set-off will be allowed in case of losses, and gifts in virtual digital assets would be taxed in the hands of the recipient. 1% TDS is proposed on transactions in asset classes above a certain threshold.

Also, Read | RBI on Cryptocurrency in India: What does the central bank's latest circular on cryptocurrencies mean?

Test your knowledge of the Digital Rupee with this GK quiz.

FAQ

When will India's digital currency be launched?

India's Digital Rupee will be launched by the RBI in the financial year 2022-23.

Who will issue the digital currency in India?

RBI will issue the Digital Rupee, India's digital currency, this fiscal.

What is Digital Rupee?

Digital Rupee is India's digital currency which will be based on blockchain and other technologies. It is similar to a fiat currency which is issued on paper and is interchangeable with any other fiat currency.
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