India’s Union Budget 2026-27 has left the country’s crypto tax regime unchanged, retaining the existing transaction tax and withholding rules while proposing a new sanctions framework aimed at strengthening compliance around reporting on crypto assets.
Under amendments proposed in the Finance Bill 2026, entities required to report cryptoasset transactions to tax authorities would face monetary penalties for omissions, including daily fines for failure to file returns and a flat fee for inaccurate disclosures.
The provisions will come into force from April 1, 2026.
The proposal applies to reporting entities covered by Section 509 of the Income Tax Act, which requires the filing of returns related to cryptoasset transactions.
Failure to file the required return would attract a fine of ₹200 per day (approximately $2.20) for as long as non-compliance continues. A separate fixed penalty of ₹50,000, or around $545, would be levied in cases where incorrect information is submitted or errors are not rectified after being flagged.
The changes are detailed in the Memorandum explaining the provisions of the Finance Bill and would be implemented through amendments to Section 446 of the Act.
The memo says the move is intended to strengthen compliance and discourage inaccurate or incomplete reporting.
While the government has stepped up enforcement of the reporting obligation, it stopped short of altering the broader framework of the cryptocurrency tax. India continues to levy a flat 30% tax on profits from crypto transactions, along with a 1% tax deducted at source (TDS) on transactions, measures that industry participants have long argued reduce liquidity and push business activity offshore.
The decision to keep taxes and TDS unchanged disappointed parts of the domestic crypto industry, which were hoping for relief or recalibration after months of lobbying.
Market participants say the lack of reforms maintains existing frictions even as compliance obligations expand.
“The current tax framework presents challenges for retail participants by taxing transactions without recognizing losses, creating friction rather than fairness,” Ashish Singhal, co-founder of local exchange CoinSwitch, said in an email. “A reduction in TDS on VDA transactions from 1% to 0.01% could improve liquidity, facilitate compliance and improve transparency, while preserving traceability of transactions.”
“Raising the TDS threshold to ₹5 lakh would help protect small investors from a disproportionate impact,” he added.
