What is a Legal Tender?

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What is a Legal Tender? Blog Image

Overview:

The Reserve Bank of India recently decided to withdraw the ₹2000 denomination banknotes from circulation even as it reiterated that these notes will continue to be legal tender.

About Legal Tender:

  • It is a type of currency or medium of exchange. 
  • It is money that is valid and acceptable for the settlement of debts which must be recognized when issued.
  • Almost every country uses its national currency as legal tender.
  • Creditors are lawfully responsible for accepting legal tender for the repayment of debt that they have availed.
  • Legal tender is constitutioned by a law that specifies the object to be utilised as legal tender and the organisation that is commissioned to create and issue the same to the public such as the Reserve Bank of India.
  • In India, the authentic legal tender of the Reserve Bank of India consists of coins and notes. The creditors are supposed to accept them as a payment towards the debt.

 


Q1) Is Cryptocurrency a legal tender in india?

Trading of cryptocurrencies is allowed in India and a tax of 30% is charged on them. However, the status of legal tender is not given to Cryptocurrencies and they cannot be used for banking purposes.

Source: ₹2,000 currency notes withdrawn; legal tender until September 30