TLDR
- India’s Union Budget 2026 keeps crypto taxation unchanged with 30% tax on gains and 1% TDS on transactions
- Loss set-offs remain disallowed, forcing investors to pay taxes on profitable trades even with overall yearly losses
- New penalty rules start April 1, 2026: ₹200 daily for late reports and ₹50,000 for inaccurate crypto disclosures
- FY 2024-25 data shows 49% of investors had net losses but ₹511.83 crore was still collected as TDS
- Budget focused on compliance enforcement rather than tax relief, with no mention of digital assets in finance minister’s speech
India’s Union Budget 2026 maintained existing cryptocurrency tax rules without any changes. Finance Minister Nirmala Sitharaman delivered the budget speech on February 1, 2026, without mentioning digital assets or virtual currencies.
Sad to see
India 🇮🇳 has the most crypto owners in the world, with 93M+ users.
Yet, we still have no clear crypto policy.
While countries like Singapore, Dubai, and U.S are trying to become crypto hubs, India is stuck with:
– 30% tax on every trade
– 1% TDS on every… pic.twitter.com/2pIrL5U8oT— Sujal Jethwani (@SujalJethwani) January 7, 2026
The government kept the 30% tax on crypto gains in place. The 1% tax deducted at source on transactions also remains active. These rules are part of Sections 115BBH and 194S of the Income Tax Act.
Crypto investors cannot offset their losses under current rules. They must pay tax on each profitable trade individually. This applies even if their total yearly result shows a loss.
The industry had requested changes before the budget announcement. Domestic crypto exchanges and tax reporting firms submitted proposals seeking clarity and relief. The budget did not address these requests.
Tax Collection Data Shows Split Results
Data from FY 2024-25 revealed mixed outcomes for crypto investors. KoinX reported that 50.91% of investors ended the year with net gains. The remaining 49.09% recorded net losses.
Total taxable capital gains reached ₹3,722 crore during the period. Investors collectively showed ₹1,178 crore in net losses. Despite losses, they paid tax on ₹180 crore of gains due to the no-offset rule.
Tax deducted at source collections totaled ₹511.83 crore for the year. KoinX platform users contributed ₹130.16 crore, which represents 25.43% of total collections. Their actual tax liability was ₹91.64 crore, leaving ₹38.52 crore potentially refundable.
The mismatch between TDS collected and final tax liability creates cash flow issues. Investors must wait for refunds while paying upfront on each transaction.
New Penalties Target Reporting Compliance
The budget introduced new penalty provisions under Section 509 of the Income-tax Act, 2025. These rules take effect from April 1, 2026. They target crypto-related reporting failures.
Entities that fail to file required crypto statements face ₹200 per day in fines. The daily penalty continues until the report is submitted. A fixed penalty of ₹50,000 applies for inaccurate disclosures.
The same ₹50,000 fine applies if errors are not corrected after identification. Officials stated these measures aim to improve compliance across the crypto sector.
The budget did announce changes for equity markets. Share buybacks will now be taxed as capital gains for shareholders. Corporate promoters face a 22% tax rate, while non-corporate promoters pay 30%.
India’s Financial Intelligence Unit recently tightened crypto exchange rules. Exchanges must now verify users through live selfies, geo-tagging, and bank verification via test transactions. These measures strengthen KYC and monitoring requirements.
Industry executives responded to the budget announcement. Edul Patel of Mudrex, Nischal Shetty of WazirX, and Raj Karkara of ZebPay commented on policy continuity. Ashish Singhal of CoinSwitch noted that penalties formalize reporting standards.
The 30% tax rate and 1% TDS structure remain in effect for the 2026-27 fiscal year. The government focused on enforcement rather than tax structure changes. Industry groups continue to seek relief from the no-loss-offset rule.
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