Scroll Top




    Seigniorage refers to the profit made by a government from minting currency. Seigniorage is determined by the difference between the face value of the currency and the cost of producing it.

    Seigniorage - The Concept:

    Seigniorage involves the assessment of the profit or loss made on producing a currency. In case the Seigniorage is positive, the government makes an economic profit on the production of the currency. However, if the Seigniorage is negative, the government makes an economic loss.

    For example, if the cost of printing a Rs 500 note in India is Rs 2, then Rs 498 is the profit made on the production of the note. Banks earn this profit by putting the note into circulation.

    The costs are different for printing notes and for minting coins. In the case of coins, the cost will include the cost of the metal used. The government generally incurs a loss in the production of coins. This is because the melt value together with the production cost is higher than the denomination it represents.

    Seigniorage forms part of the revenue for a government when the worth of the money is more than the cost of producing it. The revenue can be used by the governments to finance a portion of their expenditure without the need to collect tax revenues.

    Seigniorage also refers to the number of goods or services a government can acquire by the printing of new notes. A government’s profit can also be affected by other factors, such as the need to make interest payments to the Federal Bank (Reserve Bank of India).


    Generally, the RBI makes a profit from printing currency. In rare cases, it would make a loss. For example, in the FY2016-17, RBI made a loss due to demonetisation. About Rs 15.4 lakh crore currency was demonetised, and 90 per cent of it had to be reprinted in the same year. As per the income statement of the RBI, the cost of printing notes increased from Rs 3421 crore in FY16 to Rs 7965 crore in FY17.

    Popular Topics

    Latest Articles

    Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

    Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

    CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

    Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

    Cleartax is a product by Defmacro Software Pvt. Ltd.

    Company PolicyTerms of use


    ISO 27001

    Data Center


    SSL Certified Site

    128-bit encryption