.png){kind=logo}
The Union Budget 2026 has introduced tougher measures to address inaccurate reporting of crypto asset transactions. Finance Minister Nirmala Sitharaman has proposed a penalty provision for non-compliance with reporting cryptocurrency assets under the new Income-Tax (I-T) Act, which is scheduled to come into effect from 1 April.
The Union Budget 2026 has sent a clear and constructive signal to India’s crypto investors by strengthening the need for accurate and timely reporting of digital asset transactions. During her Budget speech, the Finance Minister noted, “To ensure compliance with the provisions of Section 509 of the Income-tax Act, 2025 and create a deterrence for non-furnishing of statement or for furnishing inaccurate information in respect of crypto assets in such statement, it is proposed to introduce a penalty provision.”
Section 509 of the new I-T Act mentions “Penalty provision for non-furnishing of statement or furnishing inaccurate information in a statement on transaction of crypto assets.”
The section imposes an obligation on a reporting entity to provide information about a crypto-asset transaction. The proposed penalty follows amendments to section 446 of the Act and will take effect on 1 April 2026.
Section 509 of the new I-T Act proposes a penalty of Rs. 200 per day for non-furnishing of the statement. Further, it proposes to levy a Rs. 50,000 penalty for furnishing inaccurate particulars and for failure to correct such inaccuracies.
Earlier, the Financial Intelligence Unit-India (FIU-IND) updated its AML (Anti-Money Laundering) and CFT (Countering the Financing of Terrorism) guidelines in January 2026. It has classified crypto exchanges and VDA service providers as Reporting Entities under the PMLA Act, 2002 (Prevention of Money Laundering Act).
Digital asset exchanges will face higher operational and compliance costs due to increased verification, monitoring, and reporting requirements.
Crypto companies need to invest in technology, compliance teams, and build partnerships with KYC providers to integrate these rules. Analysts feel that the new norms will reduce regulatory risk in the long run.
Ashish Singhal, Co-founder of CoinSwitch, called the move a “positive milestone for the crypto industry”, noting that by imposing penalties, the government has “formalised high standards of tax compliance and reporting for both users and VASPs.”
He further added, “The 1% TDS, lack of offset of losses, and the 30% flat capital gains rate, create an asymmetric environment for genuine participation. They're risking driving Indian capital toward non-compliant offshore platforms, leaving users vulnerable to legal and financial scrutiny.”
Also Read: Union Budget 2026 Live: Sitharaman Presents Budget, Pitches Inclusive Growth and Opportunity for All
The 2026 budget strengthens accountability and brings digital asset reporting into line with established financial standards. This clarity will allow exchanges and market participants to build compliance frameworks with greater confidence and operational certainty.
The massive adoption of cryptocurrency in India is one major reason cryptocurrency exchanges have called for official regulation of the asset class.
