Neither Backing Nor Ban But Only Heavy Tax: Piyush Goyal Explains India's Take on Cryptocurrency

Speaking in Doha, Qatar, Union Minister Piyush Goyal stated that India will introduce a digital currency backed by the Reserve Bank of India (RBI). He also clarified that India does not encourage cryptocurrencies that lack backing by the RBI.

The new digital currency is aimed at simplifying and speeding up transactions, reducing paper consumption, and ensuring traceability compared to the traditional banking system.

“We have not been encouraging cryptocurrency, which does not have sovereign backing or which is not backed by assets, say it on the federal bank or local currency. India has also announced that we will be coming out with a digital currency, which will be backed by a Reserve Bank of India guarantee-like currency. Our idea is that this will only make it easier to transact. It will also reduce paper consumption and will be faster to transact than the banking system. But it will also have traceability,” he said.

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Piyush Goyal also clarified that there is no ban on cryptocurrency but they are heavily taxed in order to curb its use due to its lack of credibility and accountability.

“As far as cryptocurrency, which is not backed by the government, while there is no ban, we are taxing it very heavily. We don't encourage it because we don't want anybody to be stuck at some point with a cryptocurrency that has no backing and nobody at the backend,” he said.

It is significant to mention that India had imposed a 30% tax for income from the transfer of virtual digital assets which include cryptocurrencies. This was announced in the Union Budget 2022-23. There was also an additional 1% Tax Deducted at Source (TDS) for all crypto transactions made above Rs.10,000 which was effective July 1, 2022.

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