India’s 2026 Budget Retains 30% Crypto Tax, Introduces $545 Penalty for Reporting Lapses

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

Amendments proposed in the Finance Bill, 2026 outline monetary penalties for entities required to report crypto-asset transactions to tax authorities. The measures include daily fines for non-filing and a fixed penalty for incorrect or uncorrected disclosures, and are set to take effect from April 1, 2026.

The proposal applies to reporting entities covered under Section 509 of the Income-tax Act, which mandates the submission of statements related to crypto-asset transactions. Under the changes, failure to furnish the required statement would attract a penalty of ₹200 per day — about $2.20 — for each day the default continues. A separate flat penalty of ₹50,000, or roughly $545, would apply in cases where incorrect information is filed or errors are not rectified after being flagged by authorities.

The changes are detailed 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 measures are intended to strengthen compliance and discourage inaccurate or incomplete reporting.

While enforcement around reporting has been tightened, the government stopped short of revising the broader crypto tax structure. India continues to levy a flat 30% tax on gains from crypto transactions, along with a 1% tax deducted at source (TDS) on trades — policies that industry participants have long argued reduce liquidity and push trading activity offshore.

The decision to leave the tax and TDS framework unchanged disappointed segments of the domestic crypto industry, which had lobbied for relief or recalibration. Market participants say the lack of reform preserves existing frictions even as compliance requirements expand.

“The current tax framework presents challenges for retail participants by taxing transactions without recognising losses, creating friction rather than fairness,” said Ashish Singhal, co-founder of local exchange CoinSwitch, in an emailed statement. “A reduction in 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 shield small investors from a disproportionate impact.