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The Reserve Bank of India (RBI) has issued a concept note on Central Bank Digital Currency (CBDC) on October 7, 2022. The Note is accessible at RBI’s website (https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=1218).  This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Lok Sabha today.

The Minister state that the CBDC pilot launched by the RBI in retail segment has components based on blockchain technology.

Giving more information on the CBDC, the Minister stated that the RBI has launched pilots of CBDC in both Wholesale and Retail segments. The pilot in wholesale segment, known as the Digital Rupee -Wholesale (e₹-W), was launched on November 1, 2022, with use case being limited to the settlement of secondary market transactions in government securities. Use of (e₹-W), is expected to make the inter-bank market more efficient. Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk. The pilot in retail segment, known as digital Rupee-Retail (e₹-R), was launched on December 01, 2022, within a closed user group (CUG) comprising participating customers and merchants.

The Minister further stated that the RBI has identified eight banks for phase-wise participation in the retail pilot project. The first phase includes four banks, namely the State Bank of India, the ICICI Bank, the Yes Bank and the IDFC First Bank. Subsequently, another four banks, viz., the Bank of Baroda, the Union Bank of India, the HDFC Bank and the Kotak Mahindra Bank will participate in the retail pilot.

The Minister stated in response to another question that RBI has already rolled out a pilot in the retail version of the CBDC (e₹-R), on December 01, 2022. The e₹-R is in the form of a digital token that represents legal tender. It is being issued in the same denominations as the paper currency and coins. It is being distributed through financial intermediaries, i.e., the banks. Users will be able to transact with e₹- R through a digital wallet offered by the participating banks. Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). The e₹-R offers features of physical cash like trust, safety and settlement finality. Like cash, the CBDC will not earn any interest and can be converted to other forms of money, like deposits with banks.

On the other steps being taken by RBI for full operationalisation of CBDC include expanding  the  scope  of  the  pilots  gradually  to  include  more  banks,  users and locations based on feedback received during the pilots, the Minister stated

The Centre’s direct tax collections, net of refunds, have increased by over 24% on year in the first eight months of the current fiscal, indicating continued revenue buoyancy and recovery in economic activities.

The collections amounted to Rs 8.77 trillion between April and November 30 this fiscal, registering a 24.26% growth compared to the corresponding period last fiscal. “This collection is 61.79% of the total Budget Estimates of direct taxes for the fiscal 2022-23,” the finance ministry said in a tweet on Monday.

The Centre has pegged its gross direct tax collections (before devolution to states) at Rs 14.2 trillion for the fiscal and indications are that it will surpass the target. Revenue from corporate and personal income tax primarily make up the direct tax kitty.

A better picture on the trend in direct tax collections will arise based on the advance tax tranche on December 15.

The ministry said it has processed refunds amounting to Rs 2.15 trillion between April 1, 2022 and November 30, 2022. This is 66.92% higher than refunds processed in the same period in the last fiscal.

As many as 69.7 million income tax returns for assessment year 2022-23 have been filed by November 30. This year, maximum number of returns at over 51.3 million, were filed in July.

Highlighting efforts in processing of income tax returns, the ministry said that the average processing time has come down to just 16 days this fiscal from 26 days last fiscal.

Approximately 45% of returns are processed within 24 hours of filing and 74% within seven days of filing.

“More than 24.2 million ITRs were processed in a single day for assessment year 2022-23,” it further stated. About 96.5% of the returns filed till November 30 have already been e-verified. The period of verification has been reduced from 120 days to 30 days.

Verification of income tax return is a prerequisite for processing.

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