TLDR
- India keeps 30% tax and 1% TDS on crypto in the 2026-27 Budget.
- New penalties include ₹200 per day for non-filing and ₹50,000 for errors.
- Reporting rules apply from April 1 under Section 509 of the tax law.
- Industry says unchanged tax rates hurt liquidity and discourage local trade.
India’s 2026-27 Union Budget maintains the 30% tax on crypto profits and 1% TDS on trades. However, from April 1, new compliance measures will take effect, introducing financial penalties for reporting failures and inaccuracies in crypto transactions.
Crypto Tax Structure Remains Unchanged
India’s Union Budget for 2026-27 has retained the current taxation framework for crypto assets. The existing 30% tax on gains from virtual digital assets (VDAs) and the 1 percent tax deducted at source (TDS) on transactions continue without any changes.
The decision comes after months of lobbying by crypto industry stakeholders who had requested a review of the high tax rate and TDS. However, the Finance Bill, 2026, did not include any changes to the existing structure. The unchanged tax environment continues to affect local trading volumes, according to several exchanges and market participants.
Ashish Singhal, co-founder of CoinSwitch, said in a statement that the high tax and TDS rate make it difficult for retail users. “A reduction in TDS on VDA transactions from 1% to 0.01% could improve liquidity, ease compliance, and enhance transparency while preserving transaction traceability,” he said.
New Compliance Measures from April 2026
Instead of adjusting tax rates, the government has introduced new compliance requirements for entities that report crypto transactions. These changes will come into effect on April 1, 2026. They are part of amendments to Section 446 of the Income-tax Act.
Under the updated rules, reporting entities under Section 509 must submit statements of crypto-asset transactions to tax authorities. Failure to do so will lead to a daily fine of ₹200 (approximately $2.20) for each day the filing is delayed.
In addition, if incorrect or misleading information is filed and not corrected after being flagged, a flat penalty of ₹50,000 (around $545) will be charged. These penalties are designed to improve transparency and ensure accurate data reporting in the growing digital asset market.
Concerns from Industry Stakeholders
While the government aims to strengthen compliance, many in the crypto industry have expressed concern over the lack of reform in the tax policy. Industry participants have argued that the existing tax structure does not allow the deduction of losses, which creates a burden for small and retail investors.
Some experts believe that the unchanged 1% TDS continues to reduce market liquidity and may push Indian users toward offshore platforms with more flexible policies. Proposals such as reducing the TDS rate or increasing the threshold for TDS from ₹10,000 to ₹500,000 were not included in the budget.
“Raising the TDS threshold to ₹5 lakh would help protect small investors from disproportionate impact,” added Singhal.
Government’s Focus on Enforcement
The Finance Ministry has emphasized that these changes are intended to improve enforcement rather than increase tax revenue. By introducing these penalties, the government seeks to promote compliance with crypto transaction reporting laws.
The explanatory memorandum attached to the Finance Bill outlines these new provisions clearly. It states that accurate reporting is essential for monitoring crypto activity and maintaining traceability of funds in digital markets.
Although tax rates remain the same, the stricter enforcement is expected to increase the burden on crypto exchanges and reporting platforms to maintain timely and accurate records.
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