India’s 2026–27 Union Budget has retained the existing 30 % tax on cryptocurrency gains and the 1 % tax deducted at source (TDS) on crypto transactions, while introducing new penalties to enforce reporting requirements for digital asset transactions.
Under the Finance Bill, 2026, reporting entities such as exchanges, wallet providers, and other intermediaries must submit detailed statements on crypto-asset transactions under Section 509 of the Income-tax Act. Entities that fail to furnish these reports will face a penalty of ₹200 per day (about $2.20) for each day the default continues. In addition, a flat penalty of ₹50,000 (roughly $545) will be applied to cases where incorrect information is filed or errors are not corrected in a timely manner. These provisions are scheduled to take effect from April 1, 2026.
The government says the new penalty framework, inserted into Section 446 of the Act, is meant to strengthen compliance and discourage inaccurate or incomplete crypto reporting. However, the broader crypto taxation regime remains unchanged, disappointing segments of the domestic crypto industry that had lobbied for lower taxes or relief measures. Critics argue that the lack of tax reform continues to dampen market liquidity and push trading activity offshore.
While the budget preserved the core tax and TDS structure for virtual digital assets (VDAs), the new reporting penalties signal a shift toward stricter compliance enforcement for crypto-asset reporting in India.
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