India’s 2026 Budget Leaves Crypto Tax Unchanged, Adds $545 Fine for Non-Reporting

India’s Union Budget for 2026–27 has left the country’s crypto tax regime unchanged, maintaining existing transaction taxes and withholding rules, while proposing a new penalty framework aimed at strengthening compliance around crypto-asset reporting.

The Finance Bill, 2026 introduces monetary penalties for entities required to report crypto-asset transactions to tax authorities. The measures include daily fines for failure to file mandated statements and a flat penalty for inaccurate disclosures that are not corrected. The provisions are set to come into effect on April 1, 2026.

The proposal applies to reporting entities covered under Section 509 of the Income-tax Act, which requires the submission of statements related to crypto-asset transactions. Under the amendments, failure to furnish the required statement would attract a penalty of ₹200 per day — around $2.20 — for each day the default continues. A separate fixed penalty of ₹50,000, or approximately $545, would apply in cases where incorrect information is filed or errors remain uncorrected after being flagged.

The changes are outlined in the Memorandum Explaining the Provisions in the Finance Bill and would be implemented through amendments to Section 446 of the Act. According to the memorandum, the objective is to reinforce compliance and deter inaccurate or incomplete reporting.

Despite the tougher stance on reporting, the government stopped short of revising the broader crypto tax framework. India continues to impose a flat 30% tax on gains from crypto transactions, alongside a 1% tax deducted at source (TDS) on trades — policies that industry participants have long argued reduce liquidity and push activity offshore.

The decision to keep taxes and TDS unchanged disappointed parts of the domestic crypto industry, which had sought relief or recalibration after sustained lobbying. Market participants say the lack of reform leaves structural frictions in place even as compliance requirements expand.

“The current tax framework creates challenges for retail participants by taxing transactions without recognising losses, adding friction rather than fairness,” said Ashish Singhal, co-founder of local exchange CoinSwitch, in an emailed statement. “Reducing TDS on virtual digital asset transactions from 1% to 0.01% could improve liquidity, ease compliance, and enhance transparency while preserving transaction traceability.”

Singhal added that raising the TDS threshold to ₹5 lakh would help protect small investors from disproportionate impact.