India’s Union Budget 2026: No Revisions to Crypto Tax Framework Amid Industry Calls for Reform

India Sticks to Existing Crypto Tax Framework in Union Budget 2026

In a move that has left many in the crypto industry disappointed, India has announced its Union Budget 2026, opting to maintain its current tax framework for cryptocurrency transactions. Finance Minister Nirmala Sitharaman’s announcement, made during a highly anticipated session, has drawn criticism from industry experts who had hoped for reforms to stimulate growth and participation in the burgeoning digital asset market.

Despite numerous calls for a review of the existing tax policies, which include a 1% tax deducted at source (TDS) on crypto transactions and restrictions on offsetting losses, the government has chosen to stick with the status quo. This decision comes at a time when the crypto market is maturing, and many believed that the budget presented an opportunity for India to enhance its competitive edge in the global digital economy.

Edu Patel, CEO of Mudrex, expressed disappointment over the lack of reforms, stating that the decision reflects a continuity that may hinder market participation and onshore liquidity. “While the sector has shown resilience despite regulatory challenges, a reform of transaction taxes and enabling loss offsets would have significantly strengthened our position in the global landscape,” he said. Patel remains optimistic, however, that ongoing dialogue between policymakers and industry leaders could lead to future improvements.

Nischal Shetty, founder of WazirX, echoed Patel’s sentiments, emphasizing that the existing framework continues to pose challenges for traders and investors. He warned that the decision could adversely affect liquidity and competitiveness on the international stage. Like Patel, Shetty holds out hope for constructive discussions with authorities to address these pressing issues.

New Penalties for Compliance Introduced

In a notable aspect of the budget, Finance Minister Sitharaman announced the introduction of penalties aimed at ensuring compliance with the provisions of Section 509 of the Income Tax Act. Starting April 1, 2026, traders who fail to report their crypto transactions accurately will face a penalty of Rs. 200 per day, while those who report inaccurate information will incur a penalty of Rs. 50,000.

Ashish Singhal, co-founder of CoinSwitch, welcomed the introduction of specific penalties, viewing it as a step towards formalizing tax compliance standards in the crypto industry. “By mandating penalties for non-reporting and inaccurate reporting, the government is setting a new standard for both users and crypto exchange platforms,” he noted. However, Singhal emphasized that true growth in the sector requires economic policies that retain Web3 companies and talent within India.

Under the current Income Tax Act, gains from Virtual Digital Assets (VDAs), including cryptocurrencies and NFTs, will continue to be taxed at a flat rate of 30%, with an additional 1% deducted at source on every transaction. Non-trading income will be taxed according to individual income slabs.

As the crypto landscape evolves, industry experts remain hopeful that continued dialogue with the government will eventually lead to a more favorable regulatory environment, fostering growth and innovation in India’s digital asset sector.