Reserve Bank of India Furthers CBDC Efforts: Report

Sujha Sundararajan
Last updated: | 2 min read
Source: Pixabay

The Reserve Bank of India (RBI) is now exploring tech solution for privacy concerns of central bank digital currency (CBDC).

According to an insider who is familiar with the government’s CBDC moves, India is making progress in CBDCs with caution. The unnamed source told CoinDesk that the central bank is keen on improving privacy issues associated with the digital rupee.

“A privacy legislation is not the only way. Other ways to tackle this problem – particularly technology – do exist, and our team is exploring that,” the officer noted.

Furthermore, the source also revealed that India’s CBDC pilot might see participation from local startups in the future.

“The evolution of a CBDC requires experimentation and considerable efforts to make it a secure product for the nation, and that can take time,” the official added.

Additionally, the officer confirmed that RBI does not have crypto taxation in its domain. Taxation of digital assets comes under legislation and is the sole responsibility of the government, the insider noted.

India Budget 2024 Skips Crypto Tax Change

India’s recent budget session did not mention any changes to its existing crypto tax deducted at source (TDS) policy. The country previously announced 30% tax on crypto profits and a 1% TDS on all transactions, affecting the local crypto service providers and investors.

On Feb 1., Social medias overflowed with hash tags #ReduceCryptoTax urging the Indian government to lower the taxes imposed on cryptos. During the interim budget presented in the parliament on Thursday, the country’s Finance Minister Nirmala Sitharaman noted that there is no changes on taxes implemented of digital currencies.

Sathvik Vishwanath, co-founder and CEO of India-based crypto exchange Unocoin said that the campaign to reduce crypto tax “won’t stop.” In his post on X (Twitter), he wrote,

“Today, it marks the second anniversary of this #reducecryptotax campaign that we started on 1st Feb 2022. The day of budget speech when 30% income tax, 1% TDS and no set off of losses were announced. It won’t stop till we have fair crypto tax.”

Rajagopal Menon, VP of crypto exchange WazirX said that cryptos can be a force multiplier in achieving a developed nation. He further told Cryptonews that digital public infrastructure will benefit from integrating provisions for long term financing of domestic crypto projects given how India is at a pivotal phase in the crypto revolution.

“We expect these developments to factor in the government’s agenda along with our existing requests for a reduction in TDS rates to 0.01 percent and offset of losses for traders.”