'Bitcoin, Ethereum, or NFT will never become legal tender', Finance Ministry clarifies

In a big statement, the Finance Ministry on Wednesday announced that apart from the digital currency issued by the Reserve Bank of India (RBI), other digital assets will 'never become a legal tender'. Addressing a press conference, Finance Secretary TV Somanathan stated that while people could buy cryptocurrency, the asset would not have value authorization by the government. Bitcoin, Ethereum, or NFT will never become legal tender, he clarified. 

"Digital currency will be backed by RBI which will never be the 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," said the Finance Secy.

"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 govt," he added.

Union Budget 2022: Nirmala Sitharaman on Digital Rupee and Crypto taxation

To boost the Indian economy, the Reserve Bank of India will issue a digital rupee using blockchain and other technologies in the Financial Year 2022-23. "Digital rupee to be issued using blockchain and other technologies; to be issued by RBI starting 2022-23. This will give a big boost to the economy," Finance Minister Nirmala Sitharaman said.

The Finance Minister also announced that the income from the transfer of any virtual digital asset shall attract 30% tax. She said, "no deduction in respect of any expenditure or allowance shall be allowed while computing such income except the cost of acquisition."

Sitharaman added that loss from the transfer of virtual digital assets cannot be set off against any other income. The imposition of 1% TDS on payment made in relation to the transfer of virtual digital assets was also announced.

Meanwhile, Prime Minister Narendra Modi on Wednesday said that the digital rupee, proposed in the union budget, will open 'new opportunities' in the fintech sector. Addressing the 'Atmanirbha Arthavyavastha' (self-reliant economy) symposium he said, "Central Bank Digital Currency (CBDC) will strengthen the digital economy... If anyone makes a payment in digital currency, you will be able to change it to cash."

(With agency inputs)