What is Digital Currency?

Digital currency is any currency that’s available exclusively in electronic form. Electronic versions of currency already predominate most countries’ financial systems. 

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5-Major Announcements of Budget 2021-2022

  • 1. Continuous financial support to digital payments
    • The financial support for the digital payment ecosystem announced in the previous Budget continues in 2022-23, encouraging the adoption of digital payments. 
    • Promoting the digital economy, fintech and technology-enabled development is one of the primary goals of the government to attain the “Amrit Kaal” vision of India@100. 
  • 2. Digital Banking Unit
    • Digital banking units would push ahead financial inclusion, and the banks might see improved access to liabilities pools from newer consumer sources in those geographies.
  • 3. Core Banking Unit in Post Offices
    • All the 1.5 lakh post offices in India are set to be connected to the core banking unit in the FY 2022-23. 
    • This will enable financial inclusion and access to post office accounts through net banking, mobile banking, ATMs, and also provide online transfer of funds between post office accounts and bank accounts.

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  • 4. New Taxation System for Virtual Digital Assets
    • Budget 2022 has provided for taxing rights by defining comprehensively the term Virtual Digital Assets (VDA) under the Income tax Act under a Chapter dealing with Tax on Special Cases, providing for a flat rate of 30 percent. 
    • To ring fence the compliance circle, a withholding tax of 1 percent has been prescribed under section 194S to also enforce a tax on VDAs which are gifted.
  • 5. Central Bank Digital Currency
    • The budget proposal mentions that the digital rupee will be introduced by the Reserve Bank of India (RBI) in FY 2022-23.
    • A central bank digital currency (CBDC) is a digital currency that would be issued and overseen by a country’s central bank.
    • Digital Rupee can have many uses, such as in programmable payments for subsidies and by financial institutions for quicker lending and payments.

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Archive of Gist of Yojana | March 2022: Union Budget 2022-23

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