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Union Budget 2026 Tightens Crypto Scrutiny with New Penalties, Leaves Tax Rates Unchanged
The Union Budget 2026, presented on February 1, 2026, provided no tax relief for India’s estimated 90 million crypto investors, maintaining the existing high tax rates while introducing new penalties for reporting non-compliance. Despite significant industry lobbying for a reduction in the 1% TDS and the ability to offset losses, Finance Minister Nirmala Sitharaman focused instead on tightening the regulatory net under the new Income Tax Act, 2025, which takes effect from April 1, 2026.
Key Crypto Tax Provisions for 2026
The core tax structure for Virtual Digital Assets (VDAs) remains unchanged from previous years:
30% Flat Tax: A flat tax of 30% (plus applicable surcharge and 4% cess) continues to apply to all profits from the transfer of VDAs, regardless of the holding period.
1% TDS: The 1% Tax Deducted at Source (TDS) on every transaction remains in place to track trades, a measure that the industry argues continues to drain market liquidity.
No Loss Set-off: Investors still cannot offset losses from one crypto asset against gains from another, nor can they carry forward losses to future years.
Limited Deductions: Only the cost of acquisition is allowed as a deduction; other expenses like mining or transaction fees are not deductible.
New Penalties for Reporting Entities
The Finance Bill 2026 introduced specific penalties for crypto exchanges and platforms (Reporting Entities) to ensure accurate transaction reporting:
Daily Penalty: A fine of ₹200 per day will be levied for failure to furnish required transaction statements.
Inaccuracy Fine: A fixed penalty of ₹50,000 will be imposed for providing inaccurate particulars in reporting statements.
Effective Date: These new penalty provisions under Section 509 of the Income Tax Act, 2025, come into force starting April 1, 2026.
Industry Reaction and Market Context
The industry has expressed disappointment, noting that while the government is formalising compliance, it is ignoring the "economic rationalisation" needed for growth.
Liquidity Migration: Experts warned that the lack of tax relief continues to push trading volumes to non-compliant offshore platforms, leaving domestic exchanges struggling for liquidity.
Investor Sentiment: Recent data showed nearly 49.09% of Indian crypto users reported net capital losses in the previous fiscal year, yet many still faced tax liabilities due to the inability to offset those losses.
Regulatory Direction: Stakeholders viewed the inclusion of penalties as a "positive milestone" for formalising the sector, but cautioned that true growth requires treating crypto more like traditional financial assets.
#unionbudget
#CryptoTaxIndia
#NirmalaSitharaman
#VDA
Key Crypto Tax Provisions for 2026
The core tax structure for Virtual Digital Assets (VDAs) remains unchanged from previous years:
30% Flat Tax: A flat tax of 30% (plus applicable surcharge and 4% cess) continues to apply to all profits from the transfer of VDAs, regardless of the holding period.
1% TDS: The 1% Tax Deducted at Source (TDS) on every transaction remains in place to track trades, a measure that the industry argues continues to drain market liquidity.
No Loss Set-off: Investors still cannot offset losses from one crypto asset against gains from another, nor can they carry forward losses to future years.
Limited Deductions: Only the cost of acquisition is allowed as a deduction; other expenses like mining or transaction fees are not deductible.
New Penalties for Reporting Entities
The Finance Bill 2026 introduced specific penalties for crypto exchanges and platforms (Reporting Entities) to ensure accurate transaction reporting:
Daily Penalty: A fine of ₹200 per day will be levied for failure to furnish required transaction statements.
Inaccuracy Fine: A fixed penalty of ₹50,000 will be imposed for providing inaccurate particulars in reporting statements.
Effective Date: These new penalty provisions under Section 509 of the Income Tax Act, 2025, come into force starting April 1, 2026.
Industry Reaction and Market Context
The industry has expressed disappointment, noting that while the government is formalising compliance, it is ignoring the "economic rationalisation" needed for growth.
Liquidity Migration: Experts warned that the lack of tax relief continues to push trading volumes to non-compliant offshore platforms, leaving domestic exchanges struggling for liquidity.
Investor Sentiment: Recent data showed nearly 49.09% of Indian crypto users reported net capital losses in the previous fiscal year, yet many still faced tax liabilities due to the inability to offset those losses.
Regulatory Direction: Stakeholders viewed the inclusion of penalties as a "positive milestone" for formalising the sector, but cautioned that true growth requires treating crypto more like traditional financial assets.
#unionbudget
#CryptoTaxIndia
#NirmalaSitharaman
#VDA
📢 No Crypto in FM’s 2026 Budget Speech? 🥲
Today’s Union Budget by FM Nirmala Sitharaman covered infrastructure, semiconductor missions, capex hikes and more — but crypto and virtual digital assets didn’t get a mention in the main speech. Despite growing calls from the industry for tax reform and regulatory clarity, nothing concrete came up in the Budget address itself. �
mint +1
Crypto investors and platforms had hoped for: • Rationalised tax rates on gains
• Relief on 1% TDS on transactions
• Allowing loss set-offs against gains
• Clearer regulation to bring more activity onshore
…but these didn’t make it into today’s speech. �
The Economic Times
Looks like the crypto community will be waiting a bit longer for clarity — or looking for answers in Budget documents and the Finance Bill later. What do you think — was this a miss or strategic silence? 🤔
#Budget2026 #Crypto #India #VDA #FinanceMinister
Today’s Union Budget by FM Nirmala Sitharaman covered infrastructure, semiconductor missions, capex hikes and more — but crypto and virtual digital assets didn’t get a mention in the main speech. Despite growing calls from the industry for tax reform and regulatory clarity, nothing concrete came up in the Budget address itself. �
mint +1
Crypto investors and platforms had hoped for: • Rationalised tax rates on gains
• Relief on 1% TDS on transactions
• Allowing loss set-offs against gains
• Clearer regulation to bring more activity onshore
…but these didn’t make it into today’s speech. �
The Economic Times
Looks like the crypto community will be waiting a bit longer for clarity — or looking for answers in Budget documents and the Finance Bill later. What do you think — was this a miss or strategic silence? 🤔
#Budget2026 #Crypto #India #VDA #FinanceMinister
🇮🇳 India Is Reviewing Its Entire Crypto Framework 🇮🇳
$BTC $XRP $BNB
India is conducting a full review of its Virtual Digital Asset (VDA) rules to boost investor protection, tighten oversight on offshore exchanges, and align regulations with global G20 standards.
A major step toward clearer, more structured crypto laws in the country.
— Cryptoolndia X
#IndiaCrypto #Regulation #VDA
$BTC $XRP $BNB
India is conducting a full review of its Virtual Digital Asset (VDA) rules to boost investor protection, tighten oversight on offshore exchanges, and align regulations with global G20 standards.
A major step toward clearer, more structured crypto laws in the country.
— Cryptoolndia X
#IndiaCrypto #Regulation #VDA
🚨 India Tightens the Screws on Crypto Tax Compliance
🇮🇳 India’s Finance Ministry has launched a major crackdown on crypto traders who failed to disclose their Virtual Digital Asset (VDA) income. This marks a new era of enforcement in the country's evolving digital asset landscape.
📩 Under the CBDT's NUDGE initiative, over 44,000 emails & messages were sent to individuals flagged for crypto activity not reported in their tax filings.
🔑 Key Figures:
• ₹705 crore (~$80M) collected from VDA taxes (FY23–FY24)
• ₹630 crore (~$75M) in undisclosed crypto income uncovered via raids and surveys
⚠️ Enforcement measures include:
• Reassessment notices
• Seizure operations under the Income Tax Act, 1961
🌐 While India still lacks a comprehensive regulatory framework for crypto, this aggressive stance shows that tax compliance is non-negotiable—even in a gray regulatory zone.
🔍 What this means for the industry:
• Voluntary disclosure is now mission-critical
• Regulatory clarity may still be distant, but tax enforcement is already here
#Crypto #DigitalAssets #VDA #Blockchain #CBDT
https://coingape.com/india-launches-major-crackdown-on-crypto-traders-over-undisclosed-income/?utm_source=bnb&utm_medium=coingape
🇮🇳 India’s Finance Ministry has launched a major crackdown on crypto traders who failed to disclose their Virtual Digital Asset (VDA) income. This marks a new era of enforcement in the country's evolving digital asset landscape.
📩 Under the CBDT's NUDGE initiative, over 44,000 emails & messages were sent to individuals flagged for crypto activity not reported in their tax filings.
🔑 Key Figures:
• ₹705 crore (~$80M) collected from VDA taxes (FY23–FY24)
• ₹630 crore (~$75M) in undisclosed crypto income uncovered via raids and surveys
⚠️ Enforcement measures include:
• Reassessment notices
• Seizure operations under the Income Tax Act, 1961
🌐 While India still lacks a comprehensive regulatory framework for crypto, this aggressive stance shows that tax compliance is non-negotiable—even in a gray regulatory zone.
🔍 What this means for the industry:
• Voluntary disclosure is now mission-critical
• Regulatory clarity may still be distant, but tax enforcement is already here
#Crypto #DigitalAssets #VDA #Blockchain #CBDT
https://coingape.com/india-launches-major-crackdown-on-crypto-traders-over-undisclosed-income/?utm_source=bnb&utm_medium=coingape
Union Budget 2025: New Crypto Tax Proposals and What They Mean for Traders
In a significant development from India’s Union Budget 2025, cryptocurrency has been brought under Section 158B of the Income Tax Act, which addresses “undisclosed income.” This move introduces block assessments for crypto traders, empowering government agencies to investigate unreported crypto income, potentially imposing a hefty tax penalty of up to 60% for non-disclosure.
This retrospective measure, set to apply from February 1, 2025, will drastically increase the risk for retail crypto investors or traders who fail to report their earnings. Under block assessment, taxes are levied over multiple years, significantly escalating the financial consequences. Meyyapan Nagappan, Partner at Trilegal, pointed out that this shift will likely encourage traders to transact through regulated exchanges that withhold taxes, ensuring compliance with tax laws.
Moreover, India’s inclusion in the Crypto Asset Reporting Framework (CARF), as per the G20 declaration, mandates automatic exchange of tax information on crypto-assets across 52 jurisdictions. Alongside, the definition of “crypto asset” has been updated, recognizing it as a digital value secured by cryptographic technology, applicable from April 1, 2026.
Despite these advancements, there is no relief on high taxes in the sector. The current tax regime includes a 30% tax on crypto income and a 1% TDS on crypto transactions exceeding ₹10,000. These taxes have led to a sharp decline in trading volumes on Indian exchanges, with losses of up to 90% since their introduction in 2022.
While traders were hoping for tax reductions to foster participation, concerns remain over the continued disparity between compliant domestic exchanges and non-compliant international ones, particularly regarding the TDS provisions. The crypto community continues to await further adjustments to encourage growth while balancing regulatory oversight.
#CryptoTax #UnionBudget2025 #VDA #IndiaCrypto
In a significant development from India’s Union Budget 2025, cryptocurrency has been brought under Section 158B of the Income Tax Act, which addresses “undisclosed income.” This move introduces block assessments for crypto traders, empowering government agencies to investigate unreported crypto income, potentially imposing a hefty tax penalty of up to 60% for non-disclosure.
This retrospective measure, set to apply from February 1, 2025, will drastically increase the risk for retail crypto investors or traders who fail to report their earnings. Under block assessment, taxes are levied over multiple years, significantly escalating the financial consequences. Meyyapan Nagappan, Partner at Trilegal, pointed out that this shift will likely encourage traders to transact through regulated exchanges that withhold taxes, ensuring compliance with tax laws.
Moreover, India’s inclusion in the Crypto Asset Reporting Framework (CARF), as per the G20 declaration, mandates automatic exchange of tax information on crypto-assets across 52 jurisdictions. Alongside, the definition of “crypto asset” has been updated, recognizing it as a digital value secured by cryptographic technology, applicable from April 1, 2026.
Despite these advancements, there is no relief on high taxes in the sector. The current tax regime includes a 30% tax on crypto income and a 1% TDS on crypto transactions exceeding ₹10,000. These taxes have led to a sharp decline in trading volumes on Indian exchanges, with losses of up to 90% since their introduction in 2022.
While traders were hoping for tax reductions to foster participation, concerns remain over the continued disparity between compliant domestic exchanges and non-compliant international ones, particularly regarding the TDS provisions. The crypto community continues to await further adjustments to encourage growth while balancing regulatory oversight.
#CryptoTax #UnionBudget2025 #VDA #IndiaCrypto
India’s Crypto Crossroads: Cautious Today, Potential Tomorrow?”
Crypto isn’t illegal in India—but a 30% profit tax, 1% TDS, and required FIU registration make the landscape tough. Exchanges like Binance and Coinbase have re-entered, but retail volumes have fled offshore. Meanwhile, the RBI debates crypto’s stability risks while piloting the Digital Rupee. Everything hinges on the upcoming policy discussion—will India embrace digital assets or retreat behind CBDCs and capital controls?
#IndiaCrypto #CryptoTax #VDA #DigitalRupee #BİNANCE #writetoearn #CryptoRegulationBattle #cryptoindia
Crypto isn’t illegal in India—but a 30% profit tax, 1% TDS, and required FIU registration make the landscape tough. Exchanges like Binance and Coinbase have re-entered, but retail volumes have fled offshore. Meanwhile, the RBI debates crypto’s stability risks while piloting the Digital Rupee. Everything hinges on the upcoming policy discussion—will India embrace digital assets or retreat behind CBDCs and capital controls?
#IndiaCrypto #CryptoTax #VDA #DigitalRupee #BİNANCE #writetoearn #CryptoRegulationBattle #cryptoindia
BULLETIN: India Confirms Strict Crypto Tax Regime for 2025
The Indian government has solidified its rigorous approach to taxing Virtual Digital Assets (VDAs), including cryptocurrencies, with detailed guidance confirming the continuation of a flat 30% tax rate on all transfer income. This rate, one of the highest globally, is applied irrespective of the holding period and is subject to an additional surcharge and cess. $TWT
A core provision that remains contentious within the Indian crypto community is the strict rule allowing no set-off of losses. $BNSOL
This means losses from one crypto trade cannot be used to offset gains from another, nor can they be carried forward. Furthermore, a mandatory 1% Tax Deducted at Source (TDS) is applied to most transactions above a minimal threshold, acting as a crucial tracking mechanism for the tax authorities. While the measures aim to bring clarity and revenue from the burgeoning sector, the stringent, punitive structure continues to fuel debate among traders and investors who argue for a more favorable, capital-asset-like treatment.
$XMR
* #IndiaCryptoTax
* #VDA
* #CryptoRegulation
* #Flat30Percent
The Indian government has solidified its rigorous approach to taxing Virtual Digital Assets (VDAs), including cryptocurrencies, with detailed guidance confirming the continuation of a flat 30% tax rate on all transfer income. This rate, one of the highest globally, is applied irrespective of the holding period and is subject to an additional surcharge and cess. $TWT
A core provision that remains contentious within the Indian crypto community is the strict rule allowing no set-off of losses. $BNSOL
This means losses from one crypto trade cannot be used to offset gains from another, nor can they be carried forward. Furthermore, a mandatory 1% Tax Deducted at Source (TDS) is applied to most transactions above a minimal threshold, acting as a crucial tracking mechanism for the tax authorities. While the measures aim to bring clarity and revenue from the burgeoning sector, the stringent, punitive structure continues to fuel debate among traders and investors who argue for a more favorable, capital-asset-like treatment.
$XMR
* #IndiaCryptoTax
* #VDA
* #CryptoRegulation
* #Flat30Percent
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