Budget 2026 proposes penalties for non-compliance in crypto reporting

Union Budget 2026 introduces daily and lump-sum penalties for lapses in crypto asset reporting, aiming to bring virtual digital assets firmly within the formal tax compliance framework

Stricter penalties have been proposed for non-compliance with crypto asset reporting requirements under the Income-tax Act, bringing the sector under formal tax compliance and reporting standards.

 

Penalties are being introduced to create deterrence for non-furnishing of statements or for providing incorrect information regarding crypto assets, Finance Minister Nirmala Sitharaman said on Sunday in her Union Budget speech.

 

What penalties will apply for non-furnishing or incorrect reporting of crypto data?

 

The proposal includes a penalty of Rs 200 per day for non-furnishing of statements and Rs 50,000 for furnishing inaccurate particulars and failure to correct such inaccuracy.

 

“To ensure compliance with the provisions of Section 509 of the Income-tax Act, 2025, and create a deterrence for non-furnishing of statements or for furnishing inaccurate information in respect of crypto assets in such statements, it is proposed to introduce a penalty provision,” she said.

 

How have crypto exchanges reacted to the proposed penalties?

 

Crypto exchanges in the country welcomed the move, stating that it would improve compliance and transparency in the sector.

 

“The Union Budget 2026 proposes strengthening compliance for crypto platforms over lapses in transaction disclosures, aiming to curb tax evasion in virtual digital assets. This requires exchanges to bolster compliance and accurate reporting of user transactions,” said Sumit Gupta, co-founder, CoinDCX, a crypto exchange platform.

 

What concerns remain for the crypto industry despite the move?

 

Meanwhile, players said that due to the existing 1 per cent tax deducted at source (TDS) and 30 per cent capital gains tax, more users have been preferring offshore companies for crypto participation.

 

Industry participants added that the proposed penalties, in addition to existing taxes, imply higher compliance standards and costs for domestic platforms.

 

“By mandating a Rs 200 daily penalty for reporting delays and a Rs 50,000 fine for inaccuracies, the government has formalised high standards of tax compliance and reporting for both users and virtual asset service providers (VASPs). The 1 per cent TDS, lack of offset of losses and the 30 per cent flat capital gains rate create an asymmetric environment for genuine participation. These measures risk driving Indian capital towards non-compliant offshore platforms, leaving users vulnerable to legal and financial scrutiny,” said Ashish Singhal, co-founder, CoinSwitch, a crypto exchange platform.