From denial to ignorance to finally being a part of the huge and popular cryptocurrency tech and market, the Government of India has changed its stance over the last few years. It has definitely been a roller coaster ride for cryptocurrencies in India.
On February 01st, 2022, the Union Finance Minister of India Mrs. Nirmala Sitharaman introduced a new sub-section to the Income Tax Act – 1995 reflecting the intermediate stance of the government on cryptocurrencies. The new policies were subjected to a lot of criticism from the people at first but eventually, it also created a sense of trust in the cryptocurrencies when the Central Bank Digital Currency was launched on November 01st, 2022, and December 01st, 2022. So what the heck is this Central Bank Digital Currency that has changed the public sentiment towards the new policies regulating the tax obligations on crypto profits completely in about 8 months? Let us try to break it down for you in the most simple terms possible in the upcoming sections without any further delay and also calculate crypto tax in India.
What is Central Bank Digital Currency?
As pledged by Mrs. Nirmala Sitharaman on February 01st, 2022 while presenting the budget for the FY 2022-23, the government will soon launch its own cryptocurrency based on blockchain technology, which will be backed by the Reserve Bank of India (RBI), Central Bank Digital Currency (CBDC) was launched in the months of November 2022 and December 2022. CBDC pilots were launched in both the wholesale segment and the retail segment of the Indian market.
What are the two forms of Central Bank Digital Currencies available and what are their usage?
As mentioned in the previous section, Central Bank Digital Currency (CBDC) pilots are launched by the RBI in two forms namely, Digital Rupee – Wholesale (e₹ – W) and Digital Rupee – Retail (e₹ – R). The two forms of digital currencies are meant for two very different purposes.
On November 01st, 2022, Digital Rupee -Wholesale (e₹ – W) was introduced, with the secondary market settlement of government securities transactions as its sole use case. The interbank market is anticipated to become more effective with the use of (e₹ – W).
The digital Rupee-Retail (e-R) retail segment pilot was introduced on December 1, 2022, to a closed user group (CUG) of participating customers and merchants. This form of CBDC pilot can be used to settle P2P (Person to Person) and P2M (Person to Merchant) transactions in the retail market.
Although the rules have been declared along with the launch of CBDCs, calculating the taxes can be really challenging especially at a time when you have got much less time to learn and strategize about taxation because 31st March 2023 is not very far. You can Binocs to calculate your taxes in just a few clicks and also provides a crypto profit calculator inr. Binocs helps to calculate your total tax obligations from multiple cryptocurrencies using the rules and regulations of the government around crypto tax which are changing dynamically.