India Tightens Crypto Tax Compliance Rules While Holding Tax Rates Steady

The Indian government has signaled no relief for cryptocurrency investors with its 2026-27 federal budget, maintaining the 30% tax on crypto gains and 1% withholding tax that have long frustrated industry participants. However, the budget introduced a more consequential shift: stricter reporting and compliance requirements designed to catch tax evaders who fail to properly disclose their crypto asset transactions.

Tax Rates Remain Unchanged Amid Industry Pressure

For the crypto tax in India, the headline news is clear—nothing has budged on the primary tax burden. The 30% capital gains tax and 1% withholding tax structure stays intact, disappointing cryptocurrency exchanges, traders, and advocacy groups who had pushed hard for reductions. These rates have become a key friction point in India’s developing digital asset ecosystem, with stakeholders arguing they’re too punitive compared to other countries’ approaches.

The government’s position reflects a broader policy trend: rather than lowering rates to encourage crypto adoption, Indian officials are tightening the enforcement machinery to ensure existing taxes are actually collected.

New Penalties Bite Hard Starting April 2026

More significantly, the government has introduced enforcement teeth through amendments to Section 509 of the Income Tax Act, set to take effect April 1, 2026. These new crypto tax measures target entities that fail to file accurate reports about their cryptocurrency transactions.

The penalty structure is tiered:

• Entities failing to submit required reports will face a daily fine of 200 rupees (roughly $2.2) until compliance is achieved, creating a compounding burden for ongoing non-compliance
• For incomplete or incorrect information that isn’t corrected after notification, a flat penalty of 50,000 rupees (approximately $545) applies

While individual penalties seem modest, the cumulative effect—particularly the daily accumulation clause—creates mounting pressure on traders and platforms.

What This Means for Market Participants

Officials frame these changes as necessary to “enhance compliance,” but market participants see a different reality: additional operational overhead and potential penalties that could squeeze already-tight margins. Crypto traders face new documentation burdens, while platforms must invest in reporting infrastructure to meet the tighter standards.

For those operating in India’s crypto market, the 2026 budget represents continuity on taxes but escalation on enforcement—a combination that could reshape how both retail and institutional players engage with digital assets in the region.