Launched in December 2022, the e-rupee, India’s Central Bank Digital Currency (CBDC), has rapidly grown to become a significant player in the digital payments landscape. The e-rupee witnessed exponential growth, reaching a circulation of over Rs 1,000 crore by March 2025, according to the RBI’s annual report.
Key Highlights:
- Started as a pilot program in December 2022
- Expanded nationwide within three years
- 60 lakh+ retail users by March 2025
- Introduced in two formats: Wholesale CBDC (CBDC-W) and Retail CBDC (CBDC-R)
What Is e-Rupee and How Does It Work?
The e-rupee is a digital tokenized form of India’s sovereign currency launched by the Reserve Bank of India. It functions like physical currency but in a digital format, making it accessible for everyday transactions.
How It Differs from UPI or Online Banking:
- Not account-based, but stored in a digital wallet
- Operates like physical cash with added privacy
- Issued in standard currency denominations
Tax Treatment of e-Rupee: A Currency, Not a Commodity
The e-rupee is treated as a currency, not an investment, asset, or commodity. It enjoys tax neutrality and is excluded from GST, capital gains tax, and virtual digital asset definitions under relevant tax laws.
Potential Tax Pitfalls:
- Concerns about e-Rupee being treated as hard cash
- High-risk use cases that may trigger penalties
- The need for clarity in tax laws and guidelines
The Need for Policy and Stakeholder Alignment
For the widespread acceptance and integration of e-rupee, regulatory clarity and stakeholder alignment are crucial. The government and tax authorities must provide clear guidelines to ensure smooth adoption and usage of e-rupee.
Key Takeaways for Competitive Exams:
- The e-rupee, India’s CBDC, has witnessed rapid growth since its launch in December 2022
- It is available in two formats: Wholesale CBDC (CBDC-W) and Retail CBDC (CBDC-R)
- e-Rupee functions like physical currency but in a digital tokenized form
- Users must be cautious about high-risk transactions that may lead to penalties
- Clarity in tax laws and guidelines is essential for the seamless adoption of e-rupee
