Crypto investment in India is set to enter a new phase of regulatory oversight following the announcement of fresh compliance rules in the Union Budget 2026. Presented by Finance Minister Nirmala Sitharaman in the Parliament of India, the budget introduces new penalties aimed at improving transparency, accountability, and accurate reporting of crypto-related transactions. These measures signal the government’s intent to further integrate digital assets into India’s existing financial compliance framework.
The proposed rules will come into effect on 1 April 2026, giving exchanges, investors, and service providers a limited window to prepare for stricter disclosure requirements.
New Penalties for Crypto Reporting Violations
One of the key highlights of the Union Budget 2026 is the introduction of explicit penalties for non-compliance in crypto reporting. Under Annexure Part B of the budget document—within the section focused on rationalising penalties and prosecution—the government has added a new provision specifically addressing crypto assets.
According to the proposal:
- A penalty of ₹200 per day will be levied for non-furnishing of crypto transaction statements.
- A penalty of ₹50,000 will be imposed for furnishing inaccurate or incorrect information related to crypto assets.
These penalties are proposed under Section 509 of the Income Tax Act, 2025, and are designed to reduce cases of missing, incomplete, or incorrect disclosures of digital asset transactions. By clearly defining consequences, the government aims to discourage non-compliance while strengthening the integrity of crypto-related financial reporting.
Aligning Crypto With Traditional Financial Systems
The introduction of these penalties reflects India’s broader approach to regulating digital assets: rather than banning crypto outright, the government is focusing on tighter monitoring and integration within the existing tax and compliance structure. By aligning crypto transactions more closely with traditional financial reporting standards, authorities hope to gain better visibility into digital asset flows and reduce the risk of tax evasion.
This move also reinforces the government’s position that crypto assets, while not recognized as legal tender, are taxable digital assets subject to stringent disclosure norms.
Industry Reactions: Cautious Optimism
The crypto industry’s response to the new rules has been largely positive, though not without reservations.
Raj Karkara, Chief Operating Officer of ZebPay, welcomed the budget’s focus on accountability. He stated that the new measures help bring crypto reporting closer to established financial standards, making it easier for exchanges and users to build compliant systems. According to Karkara, clarity in reporting requirements is essential for fostering long-term trust in the digital asset ecosystem.
However, concerns remain regarding the broader tax environment. WazirX founder Nischal Shetty highlighted that the continuation of the 1% Tax Deducted at Source (TDS) on crypto transactions, along with restrictions on loss set-off, continues to negatively impact liquidity and participation. These factors, he noted, still pose challenges for active traders and could limit growth within the ecosystem.
SB Seker, Head of APAC at Binance, echoed a similar sentiment. While acknowledging that the budget maintains the existing taxation framework, he emphasized the need for a more forward-looking tax structure as the digital asset market matures. Seker suggested that future policy updates should balance compliance with innovation to ensure India remains competitive in the global crypto landscape.
What This Means for Crypto Investors
For crypto investors in India, the message from Union Budget 2026 is clear: compliance is no longer optional. Accurate record-keeping, timely submission of transaction details, and transparent reporting will be essential to avoid financial penalties. Exchanges and platforms will also need to enhance their internal reporting mechanisms to ensure users meet regulatory expectations.
While the penalties may increase short-term compliance costs, they also bring greater regulatory certainty—something long sought by both domestic and international crypto players operating in India.
The Union Budget 2026 reinforces India’s firm stance on regulating crypto assets through tighter compliance and reporting standards. By introducing penalties for non-compliance and inaccurate disclosures, the government aims to improve transparency, accountability, and trust in the digital asset space. Although industry leaders have welcomed the move toward clearer rules, many continue to call for more progressive tax reforms to support long-term growth. As the new rules take effect in April 2026, India’s crypto ecosystem will need to adapt quickly to a more structured and closely monitored regulatory environment.