The Union Budget 2026 handed India’s crypto industry a double whammy: no respite from heavy-handed taxation and tougher penalties for platforms that mess up their compliance paperwork. Finance Minister Nirmala Sitharaman’s budget left the contentious tax structure untouched while proposing to impose exchanges with Rs 200 daily fines for late transaction reporting—a clear signal that the government wants the digital asset industry on a much shorter leash.
From April 2026 onward, under Section 509 of the Income Tax Act, crypto exchanges and intermediaries are required to submit periodic statements detailing crypto-asset transactions to the Income Tax Department. Although this obligation was already in place, its enforcement remained limited. Therefore, the obligation that exchanges could previously treat casually now carries serious consequences. Furthermore, the platforms submitting wrong or dodgy information will get an Rs 50,000 fine if they do not fix their mistakes.
The compliance measure proposed in the budget will ensure that platforms like WazirX and CoinDCX get their reporting in order. The government is not being subtle about what it wants: plug tax leakage in the virtual digital asset space by keeping closer tabs on crypto earnings. Exchanges need to beef up their compliance machinery or risk watching fines balloon under the new per-day penalty structure.
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Industry Grumbles About Missed Chances for Real Reform
The tougher enforcement did not come with anything the crypto sector actually wanted from this budget. Virtual digital asset taxation stayed exactly where it was, brushing aside repeated industry pleas for changes. The troublesome 1% TDS on crypto trades remains unchanged. Still there. The prohibition on deducting losses remains in place. The industry blames both of these unchanged policies for stifling market activity.
People in the crypto business admit the penalty framework does establish clearer compliance standards. But there is annoyance that Budget 2026 squandered an opening to fix transaction taxes and let investors offset their losses. Crypto firms reckon these stuck-in-place policies keep hurting trading volumes, investor interest, and India’s standing in the worldwide digital asset race.
The industry has managed to grow despite the regulatory rough weather, but insiders say smarter, measured reforms would help India hang onto Web3 talent and get entrepreneurs building serious, regulation-friendly digital asset businesses at home. The sector is banking on future conversations with policymakers to produce a framework that not only demands compliance but also helps the industry expand.
