Minister for Finance & Corporate Affairs Nirmala Sitharaman announced plans to launch a digital rupee in the financial year 2022-23.
Blockchain and other technologies will be used for the central bank digital currency (CBDC).
Presenting the Union Budget 2022-23 in Parliament, the Finance Minister said the CBDC will give a "big boost to digital economy", adding that "digital currency will also lead to a more efficient and cheaper currency management system."
The Budget also sets out plans for "income from transfer of any virtual digital asset" to be be taxed at the rate of 30 per cent.