No Tax Relief for Crypto in India's Budget 2026

The Union Budget 2026–2027 once again demonstrates the government's cautious approach to digital assets, and India's approach to cryptocurrency legislation is still strongly linked to fiscal policy. The budget provides information on how authorities intend to regulate and oversee this expanding industry as more exchanges, fintech platforms, and individual investors join the crypto realm.

The emphasis has obviously shifted toward stricter compliance, reporting, and enforcement under the income tax framework, even if the current tax regulations for virtual digital assets remain unchanged. All things considered, these actions demonstrate a preference for openness and risk control over hasty liberalisation.

• Budget Maintains Crypto Tax Regime Unchanged
• New Compliance Obligations and Penalties
• Market Reaction and Investor Sentiment
• Effects on Exchanges and Operating Platforms
• Regulatory Expectations Going Forward

Budget Maintains Crypto Tax Regime Unchanged

Since 2022, India has levied a flat 30% tax on income from virtual digital assets, such as cryptocurrency. This rate, in addition to the surcharge and cess, is applied to any profits from the sale or transfer of VDAs. The system is very strict because investors are unable to deduct the majority of their expenses, and losses cannot be offset by other revenue.

Transactions over certain thresholds are also subject to a 1% TDS. The administration maintained the TDS regulation and the 30% tax rate in Budget 2026, despite high expectations.

Industry associations have demanded more equitable treatment, which includes permitting loss set-offs akin to those in equity markets. The government has strengthened its cautious approach by keeping the current framework in place. The message for businesses and investors is clear: cryptocurrency gains in India will continue to be subject to a comparatively high tax burden unless policy changes are made.

New Compliance Obligations and Penalties

Alongside Budget 2026, the Finance Bill 2026 focuses heavily on stricter reporting and enforcement regarding bitcoin activity. Entities involved in VDAs, including exchanges, intermediaries, and custodians, will be subject to more stringent compliance obligations under the proposed revisions to the Income-tax Act.

The modifications include fines of up to ₹50,000 for giving false or misleading information, daily penalties of ₹200 for failing to provide mandatory crypto transaction statements, and further penalties of up to ₹1 lakh for persistent non-compliance.

These actions are meant to ensure uniform transaction reporting while lowering fraud, tax evasion, and opaque market practices. The framework also backs India's goal of enhancing global openness and data sharing by implementing the OECD's crypto-asset reporting requirements by 2027.

Persistent non-compliance may also result in legal action or more severe tax fines, indicating a notably more aggressive enforcement strategy.

Market Reaction and Investor Sentiment

Announcements of the budget have elicited varying responses from investors. Short-term uncertainty among cryptocurrency traders was brought to light by market discussion and media coverage following the budget's presentation. Many of these traders expressed disappointment that no tax breaks or incentives had been offered.

In order to increase retail participation and improve liquidity, a number of market participants had hoped for actions like decreasing TDS rates or permitting loss carrydown. Trading activity may now continue to be cautious as long as the current tax system is maintained and additional compliance measures are implemented, particularly for institutional players and smaller investors seeking more transparent and predictable tax treatment.

The market's reaction to the new reporting structure and if future budgets address more fundamental issues with cryptocurrency taxation will determine the true long-term effects.

Effects on Exchanges and Operating Platforms

Additionally, the budget is increasing the cost of compliance for running platforms and bitcoin exchanges. In order to comply with stricter disclosure regulations and harsher fines, businesses will now need to make greater investments in data gathering, auditing, and reporting systems.

Platforms may be subject to harsher penalties for mistakes and daily penalty for late files. Larger, better-funded companies are probably going to gain from this change, while startups and smaller exchanges that do not have robust compliance processes in place will face more pressure.

On the other hand, these more stringent requirements might foster confidence and draw in institutional investors, many of whom have been wary of less-regulated markets.

Regulatory Expectations Going Forward

A regulation-through-enforcement strategy is evident in Budget 2026. With stricter reporting guidelines meant to curb illegal and unreported transactions, cryptocurrency activity is still firmly inside the tax purview. However, several important industry requests have not been met, including decreasing TDS rates, permitting loss set-offs, and developing a distinct legal structure for cryptocurrency assets.

However, the government's decision to conform to global reporting guidelines points to a longer-term drive for increased transparency and official acknowledgement of the cryptocurrency industry. With the new Income-tax Act, 2025, expected to take effect on April 1, 2026, many stakeholders regard this budget as laying the groundwork for future regulations that will be more transparent.

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