India’s Union Budget for 2026–27 has left the country’s crypto tax framework unchanged, retaining the existing 30% tax on crypto gains and the 1% tax deducted at source (TDS) on trades, while introducing new penalties to strengthen reporting compliance.

Under the Finance Bill, 2026, entities required to report crypto-asset transactions will face daily fines for non-filing and a flat penalty for submitting incorrect or uncorrected information. The provisions will take effect from April 1, 2026.

The rules apply to reporting entities under Section 509 of the Income-tax Act, which mandates the submission of statements on crypto-asset transactions. Failure to file the statements would trigger a penalty of ₹200 per day (roughly $2.20), while inaccurate disclosures that are not corrected after being flagged would incur a flat ₹50,000 fine (around $545). The amendments will be implemented through Section 446 of the Act, with the Finance Bill’s memorandum noting the measures are designed to strengthen compliance and discourage incomplete or inaccurate reporting.

While the government has tightened enforcement around reporting, the broader crypto tax regime remains unchanged, leaving industry participants disappointed. Many in the domestic crypto sector had lobbied for adjustments to reduce frictions and boost liquidity.

“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 Indian crypto exchange CoinSwitch. “Reducing TDS on virtual digital asset transactions from 1% to 0.01% could improve liquidity, ease compliance, and enhance transparency while preserving traceability.”

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