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Banks Seek NPCI Note on Crypto UPI Curbs

Published on April 25, 2022
Current Context: Some PSBs have banned UPI as a mode of money transfer for the purchase of cryptocurrencies.
Banks Seek NPCI Note on Crypto UPI Curbs
  • What is the Issue?
    • UPI (Unified Payment Interface), does away with the need of entering Bank Details ( Such as Account Number, IFSC Code, etc) and facilitates the transfer of funds only with the help of an ID attached with the mobile number, registered with the bank. Therefore, the use of UPI for crypto purchases raises concerns.
    • RBI has time and again reiterated its opposition to cryptocurrency. It was after SC intervention that it was allowed again. Thus, there is a lack of clarity on what would be the future course of action.
    • NPCI is the umbrella interface, that has the onus of issuing statements about the usage of UPI. If at all, NPCI chooses to ban UPI as a mode of buying cryptocurrency. The crypto platforms would take a legal route.
  • What is the way forward?
    • The Government of India, imposed a 30% tax on Virtual Digital Assets (to be understood in terms of cryptocurrency) in the Budget 2022. It sets the tone for a kind of formalization otherwise the government would have not taken the tax route. On the other hand, Honorable FM has spoken in the parliament spelling fears of its misuse. She also registered the need for having a Global Framework on Cryptocurrency, on the sidelines of IMF meetings.
    • The Banks may consider going with the UPI transaction until further orders from the Central Bank or the Government. The least should be expected from NPCI regarding UPI transactions for cryptocurrency.

Question:

Q.1 What is the tax imposed on virtual digital assets, during Budget 2022?
a. 20%
b. 30%
c. 25%
d. 15%
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