India Keeps Crypto Taxes Unchanged in Union Budget 2026-27, Proposes New Penalties for Reporting Lapses

India’s Union Budget for 2026-27 has maintained the existing crypto tax regime, keeping transaction taxes and withholding rules unchanged, while introducing a new penalty framework aimed at tightening compliance and improving transparency in crypto-asset reporting. The changes were proposed through amendments in the Finance Bill, 2026, and are set to take effect from April 1, 2026.

Under the proposed amendments, entities that are required to report crypto-asset transactions to tax authorities will face stricter penalties for non-compliance. The provisions apply to reporting entities covered under Section 509 of the Income-tax Act, which mandates the submission of statements related to virtual digital asset (VDA) transactions. Any failure to furnish the required statements will attract a penalty of ₹200 per day for the duration of the default. In addition, a flat penalty of ₹50,000 will be imposed in cases where inaccurate information is submitted or where errors are not corrected after being flagged by authorities.

These changes are outlined in the Memorandum Explaining the Provisions in the Finance Bill and will be implemented through amendments to Section 446 of the Income-tax Act. According to the memorandum, the government’s objective is to strengthen compliance mechanisms and discourage incomplete or incorrect reporting of crypto transactions, reflecting a sharper focus on enforcement rather than tax reform.

While reporting requirements have been tightened, the broader crypto tax structure remains the same. India continues to levy a flat 30% tax on gains from crypto transactions, along with a 1% tax deducted at source (TDS) on trades. Industry participants have long argued that these measures reduce market liquidity and push trading activity to offshore platforms.

The decision to leave crypto taxes unchanged has disappointed segments of the domestic crypto industry, which had lobbied for reforms such as lower TDS rates or higher exemption thresholds. Market participants say the lack of tax recalibration leaves existing challenges unresolved, even as compliance obligations increase.

Ashish Singhal, co-founder of Indian crypto exchange CoinSwitch, noted that the current framework taxes transactions without recognizing losses, creating friction for retail investors. He suggested that reducing TDS on VDA transactions to 0.01% and raising the TDS threshold to ₹5 lakh could improve liquidity, ease compliance, and enhance transparency while still maintaining traceability.