THE DIGITAL RUPEE AS PART OF THE CRYPT PILOT PROGRAM IN INDIA

Cryptocurrencies have been attracting the attention of countries worldwide. Countries in the Caribbean, Central America, and Nigeria have already joined this trend, creating digital currencies and adopting them as payment methods. Are you totally new with Bitcoin and want to learn more before buying or trading? If so, the following crypto news that is crucial for beginners.

For their part, countries such as the United States, China, and some of Europe are evaluating in depth what the creation of their digital assets and the introduction of these to the traditional economic and financial system would represent.

This time it is India that captures the world’s attention after announcing earlier this year the launch of its digital currency linked and backed to the country’s Fiat currency, known as the Rupee.

Said creation and establishment will bring with it a series of tax implications, such as the payment of tax for its use and transactions in general with cryptocurrencies.

Blockchain and cryptocurrencies in India

India has stood out for being among the first levels with the countries with robust economies, ranking behind France and the United Kingdom for the fifth place among the nations with the most significant global impact at the economic level.

For this reason, cryptocurrencies, as a decentralized alternative mechanism that allows many to generate income and significant profits, have come to position themselves among the country’s inhabitants, reaching a figure of more than 5 million users, continuously increasing by almost 200 thousand users a month.

This situation is offset by the strong policies that the government has established about the use and adoption by citizens of this technology within the territory.

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In the case of Bitcoin, it is considered a legal cryptocurrency. However, it is subject to a set of restrictions related to crypto transactions, which makes it almost impossible for them to operate within the country.

The most significant concern of the Indian government is the possibility of using currencies for illicit purposes such as money laundering, which is where its restrictive measures are focused.

On the other hand, in the case of Blockchain, it is the opposite; the government has shown an open mind and is willing to create platforms based on blockchain technology, promoting the creation of India’s digital currency of the future based on the currency national The Rupee.

What is the Digital Rupee?

Cryptocurrencies, as unsupported financial instruments, are considered digital assets of value but also risky. This characteristic makes them much more vulnerable, placing them at a disadvantage compared to digital currencies backed by the reserves of a country or in the Fiat monde.

It is under this modality of digital assets that the Digital Rupee is expected to be created under the endorsement of the Reserve Bank of India (RBI), which estimates its official launch during the fiscal period 2022-2023, based on blockchain technology, waiting for the positive effects on the country’s economy and finances.

This digital currency is expected to have a value equivalent to the real Rupee without neglecting the RBI’s legal and fiscal regulations to which it will be subject and supervised.

Benefits of using digital currencies for India

The wait for the digital currency of India has ended as of November 1 this year; it will be available for use and the execution of financial transactions as instruments issued by the Indian State in the secondary market of government securities.

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There will be nine banking entities in the nation to carry out transactions on a larger scale with the Digital Rupee.

It is the first step in India’s pilot plan to establish using digital currencies.

With the implementation of this program, a decrease in the use of the national currency in the form of cash is expected, as well as high administrative costs such as bank commissions, without leaving aside cross-border payments that are usually expensive for settlement expenses.

Conclusion

Cryptocurrencies and digital assets came to revolutionize traditional finance.

With this proposal, the Indian government intends to increase national income by collecting taxes corresponding to a rate of 30% on income from transfers of digital assets.

This tax will only be levied on the concept mentioned above; including NFTs and cryptocurrencies linked to blockchain technology will be subject to payment of the tax. At the same time, the expenses will not grant any tax benefit.

The Government of India has connoted that these decisions could boost the economy and, in turn, manages the local currency effectively and efficiently.