Page 37 - Banking Finance April 2022

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districts of the country will be continued in financial year at the rate of 30%. However, loss from transfer of virtual digital
2022-23 as Aspirational Blocks Programme, inter alia to asset is not permitted to be set-off against any other income.
remove blocks in financial inclusion. Further, to capture the transaction details, it proposes to
provide for tax deducted at source ('TDS') on payments made
Infrastructure Financing in relation to transfer of virtual digital asset at the rate of 1%
of such consideration which is above a monetary threshold. Gift
The Budget lays down specific emphasis on innovative ways
of virtual digital asset is also proposed to be taxed in the hands
of financing towards achieving the goals of the PM Gati
of the recipient of such gift.
Shakti master plan by proposing to provide technical support
from the capacity building commission, funds up to INR 200
billion to facilitate infrastructure development and While the taxation of digital assets in itself may be viewed as
enhancing financial viability of infrastructure projects. The high and hence restrictive of investments in digital assets, this
Budget proposes to expand the national highways network ought to be seen as a positive move towards providing
by 25,000 kms in the financial year 2022-23. recognition to owning digital assets by citizens. This in turn
could lead to further engagement by way of investments in
Innovative means of financing has become the focus of digital assets since taxation of the same can be viewed as
international financial organisations and global investors as legitimisation of it as well. It brings the cryptocurrency industry
it helps fuel the economic growth by routing private sector in India away from the grey spectrum of financial regulation.
savings along with public sector funds towards achieving
development. The specific focus of the Budget on Cost of funding
infrastructure development is expected to accord greater
liquidity and flexibility in the fund-raising capacity of the Surety bonds are proposed to be accepted as a substitute
infrastructure sector. for bank guarantees in government procurements to
decrease indirect costs for suppliers and contractors under
Digital Rupee the Budget, making it beneficial for the import of gold. The
Insurance Regulatory and Development Authority of India
The Budget proposes that the Reserve Bank of India ("RBI") has established a framework for insurance firms to offer
shall issue its digital currency in this financial year using
blockchain and other technologies. This introduction is surety bonds. This amendment can be expected to improve
liquidity in the market, reduce the cost of funding and
expected to boost the digital economy and intends to create
an efficient and cheaper currency management system using increase access to government project opportunities.
blockchain and other technologies. The introduction of
digital currency by the RBI extends an opportunity to the Key Takeaways
citizens to partake in the digitalization of currencies across There are several proposals in the Budget which are
the world within the security of a regulated environment. futuristic and have the ability to facilitate financial inclusion

across the country. The Budget seeks to enable financial
There are certain disinclinations attached to the volatility of inclusion, both through physical and virtual networks.
other digital currencies which has been keeping the majority Inclusion of post offices in the core banking network with
population away from exposure to the efficiencies of focus on infrastructure development and encouragement of
exchanging value in digital form. This is a first and welcome digital banking may be expected to include a significant part
step in validating currency in digital form and can build the trust
of the population as beneficiaries and participants in the
and confidence of people in adapting such currency systems.
economic growth of the country.
Scheme for taxation of virtual digital
Separately, the proposal to introduce the digital rupee,
assets regulation of income earned through digital assets and

To regulate income generated from digital assets, the Budget encouragement of innovative means of financing can be
has proposed to provide for a specific tax regime where any expected to ensure that India remains in the forefront of
income from transfer of any virtual digital asset shall be taxed adopting technology in finance. T

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