India’s Union Budget for 2026–27 keeps the country’s crypto tax regime unchanged, retaining the 30% tax on crypto gains and the 1% TDS on trades, while introducing new penalties to strengthen reporting compliance.
The Finance Bill, 2026 proposes monetary penalties for entities required to report crypto-asset transactions. Daily fines of ₹200 (around $2.20) will apply for non-filing, while a flat ₹50,000 penalty (approximately $545) will be levied for incorrect disclosures that are not corrected after being flagged. The rules, covering reporting entities under Section 509 of the Income-tax Act, will take effect from April 1, 2026. The measures will be enforced through amendments to Section 446 of the Act, with the Finance Bill’s memorandum emphasizing the goal of improving accuracy and completeness in crypto reporting.
While reporting enforcement is being tightened, the broader tax framework remains unchanged, leaving parts of the domestic crypto industry disappointed. The continued high tax and TDS rates have long been cited as factors that dampen liquidity and push trading activity offshore.
“The current framework creates challenges for retail participants by taxing transactions without recognising losses, adding friction rather than fairness,” said Ashish Singhal, co-founder of Indian exchange CoinSwitch. “Reducing TDS on virtual digital asset transactions from 1% to 0.01% could boost liquidity, simplify compliance, and improve transparency while keeping traceability intact.”
Singhal also suggested raising the TDS threshold to ₹5 lakh to protect small investors from disproportionate impact.
