Budget 2026 and crypto tax: Experts decode tighter reporting rules

Tighter reporting norms bring crypto closer to mainstream financial standards: Experts

The Union Budget 2026 has offered no tax relief for crypto investors, but it has tightened the compliance framework around virtual digital assets (VDAs). Experts say while the tax burden remains unchanged, reporting standards and enforcement signals have become stronger — something investors should not ignore.

 

When does crypto become taxable?

 

Crypto is taxed not only when converted into rupees, but whenever there is a “transfer” that creates an economic gain.

 

A Mudrex, a crypto trading platform’s spokesperson, said tax liability arises in three common cases- selling crypto for INR, swapping one token for another, and using crypto to buy goods or services. Simple transfers between one’s own wallets are not treated as taxable events if ownership does not change.

 

Purvang Mashru, senior quantitative research analyst at 1 Finance, said the 30 per cent tax under Section 115BBH applies to every transfer, not just cash exits. “If you buy a token for Rs 10,000 and swap it when it is worth Rs 16,000, the Rs 6,000 gain is taxable even if you did not receive INR,” he explained. Tax at 30 per cent plus cess would apply on the gain.

 

Section 509 penalties target exchanges, not investors

 

Budget provisions introducing penalties of Rs 200 per day and Rs 50,000 for inaccurate reporting apply to reporting entities such as exchanges, not retail investors.

 

Mudrex spokesperson clarified that Section 509 places the reporting burden on platforms that must submit transaction-level statements within prescribed timelines. The intent is to ormalizes tax reporting rather than create new penalties for individual traders.

 

Ashish Singhal, co-founder, CoinSwitch, a crypto exchange platform, said the penalty framework “ormalizes high standards of tax compliance and reporting for VASPs” and supports compliance-first Indian platforms.

 

Why one per cent TDS still hurts traders?

 

The one per cent TDS on each crypto transfer continues without change. Experts say this directly affects liquidity because it is deducted on trade value, not profit.

 

Mudrex spokesperson illustrated that three consecutive trades of about Rs 1 lakh each can lock nearly Rs 3,000 as TDS, even if there is no net profit. Over higher trading volumes, the blocked capital rises and reduces trading efficiency.

 

Singhal said the one per cent TDS, no loss set-off and 30 per cent flat tax create an uneven environment and may push activity offshore.

 

Compliance checklist before filing ITR

 

Experts suggest investors should:

 

·  Download full exchange transaction history

 

·  Match TDS credits with Form 26AS and AIS

 

·  Compute gains per transfer under VDA rules

 

·  Report details correctly in Schedule VDA

 

·  Keep wallet and bank records as proof

 

Edul Patel, chief executive officer of Mudrex, said tighter rules signal a broader shift. “Long-term industry growth won’t come from innovation alone, but from building trust, consistency and regulatory clarity, and these measures are a step in that direction.”