India Tightens Crypto Disclosure Rules Starting April 2026
- India introduces daily fines for crypto platforms that miss required transaction filings.
- Misreported crypto data now triggers a fixed financial penalty under new tax rules.
- The budget keeps crypto tax rates unchanged while expanding reporting enforcement.
India’s Union Budget for 2026 sets out new penalties for the cryptocurrency sector, tightening rules around how platforms report transaction data. The changes target exchanges and other intermediaries that handle crypto assets and fall under existing tax reporting laws. The Finance Bill 2026 amendments present the proposed measures. The implementation of the Income Tax Act 2025, which replaces the previous tax system, creates the new tax regulations. The new penalty system will begin on April 1, 2026.
The update centres its focus on establishing reporting standards. Authorities require crypto platforms to submit exact transaction reports without delay, while they must fix all identified mistakes. The current system establishes immediate monetary penalties for noncompliance.
The government maintains its existing taxation system for cryptocurrency profits. The government has concentrated its efforts on enforcing laws and monitoring reporting practices.
Daily Fines and Fixed Charges Explained
The proposal applies to reporting entities covered under Section 509 of the Income Tax Act. These entities must furnish statements linked to crypto-asset transactions within the prescribed period.
When a required statement is not filed, the law imposes a penalty of ₹200 per day. The amount continues to accrue for as long as the default persists. There is no grace period once the obligation lapses. A separate penalty applies to incorrect disclosures. Filing inaccurate information or failing to correct errors after notification attracts a flat fine of ₹50,000.
These provisions are set out through amendments to Section 446 of the Act. The Memorandum Explaining the Provisions in the Finance Bill states that the objective is to strengthen compliance and discourage incomplete reporting. Together, the two penalties address both delay and accuracy. Platforms now face higher costs if they miss deadlines or submit flawed data.
Reporting Tightens While Taxes Stay Fixed
The authorities have strengthened enforcement procedures, which require reporting, yet the overall cryptocurrency tax framework remains the same. India maintains its tax system by applying a standard 30% tax rate to all profits generated from cryptocurrency transactions.
The 1% tax deducted at source on crypto trades also remains in place. Industry participants have repeatedly said this framework affects liquidity and pushes activity outside India.
The decision to leave taxes untouched disappointed parts of the domestic crypto sector. Several firms had expected some recalibration after months of engagement with policymakers. Market participants say the gap between rising compliance demands and unchanged tax burdens remains unresolved.
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Industry Reaction Reflects Uneven Impact
Reactions across the crypto industry have varied. Business leaders view the penalties as a means to establish a better understanding of regulatory requirements. The defined reporting duties and their associated penalties establish a basis that crypto platforms must follow to meet existing financial reporting standards. The regulated structured disclosures enable regulators to monitor operational activities through their complete record of activities.
Others focus on what the budget did not change. They note that existing tax rates and TDS rules continue to apply even as reporting obligations expand. “The current tax framework presents challenges for retail participants by taxing transactions without recognising losses,” Ashish Singhal, co-founder of CoinSwitch, said in an email.
He added that reducing TDS on virtual digital asset transactions from 1% to 0.01% could improve liquidity and ease compliance. Singhal also said raising the TDS threshold to ₹5 lakh would protect smaller investors. As the new penalties approach implementation, crypto platforms face tighter reporting rules under a tax structure that remains firmly in place.
