Budget 2026 Delivers Continuity, Not Change
India has officially unveiled its Union Budget 2026, and for the country’s fast-growing crypto sector, the message is clear: no tax relief is coming-at least for now. Finance Minister Nirmala Sitharaman confirmed that the government will retain the existing crypto tax framework, rejecting months of appeals from industry leaders and market participants.
Leading into the budget, India’s crypto ecosystem had hoped this would be a turning point. Many expected simplification, clarity, and competitiveness as the market matures and global jurisdictions move toward more accommodative policies. Instead, the government opted to stick with the status quo, signaling a preference for regulatory stability over growth-driven reform.
1% TDS and Loss Restrictions Remain Intact
Crucially, the budget introduced no changes to the controversial 1% tax deducted at source (TDS) on crypto transactions, nor did it relax restrictions preventing traders from offsetting losses against gains. These two measures have long been cited as the biggest obstacles to liquidity and participation in India’s crypto markets.
Edu Patel, CEO of Mudrex, said the decision reflects policy continuity rather than progress. While acknowledging that the industry has continued to grow despite these constraints, Patel noted that reducing transaction taxes and enabling loss set-offs would have significantly strengthened India’s position in the global digital asset economy. Still, he expressed optimism that ongoing dialogue with policymakers could lead to improvements over time.
A similar sentiment was echoed by Nischal Shetty, founder of WazirX. He warned that retaining the current framework continues to hamper liquidity, participation, and global competitiveness, leaving Indian traders and platforms at a disadvantage compared to peers in more flexible jurisdictions. Like others in the industry, Shetty remains hopeful that sustained engagement with regulators will eventually bring reform.
Government Tightens Compliance With New Penalties
While the government declined to ease crypto taxes, it did move to strengthen enforcement and compliance. Sitharaman announced new penalty provisions under Section 509 of the Income Tax Act, aimed squarely at deterring non-reporting and inaccurate reporting of crypto transactions.
Under the new rules, non-reporting of statements will attract a penalty of ₹200 per day, while incorrect reporting or failure to correct errors will carry a flat penalty of ₹50,000. These provisions will take effect from April 1, 2026, further formalizing oversight of crypto activity.
Ashish Singhal, co-founder of CoinSwitch, described the move as a necessary step toward regulatory maturity. He noted that clearly defined penalties create standardized expectations for both users and exchanges, reinforcing tax compliance across the ecosystem. However, Singhal cautioned that compliance alone is not enough, adding that meaningful growth will require economic incentives that keep Web3 talent and businesses anchored in India.
What Stays the Same for Indian Crypto Users
With Budget 2026 finalized, India’s crypto tax rules remain unchanged under Sections 115BBH and 194S of the Income Tax Act. Gains from Virtual Digital Assets (VDAs)-including cryptocurrencies, NFTs, and other tokens-will continue to be taxed at a flat 30% rate, with 1% TDS applied to every transaction, regardless of profitability. Non-trading income will still be taxed according to an individual’s income slab.
For now, India’s crypto industry faces another year of high taxes, strict reporting, and limited flexibility. While the government has reinforced its focus on compliance and oversight, the long-awaited reforms aimed at boosting innovation and capital inflows remain firmly on hold.
