No Tax Relief for Crypto in India's Budget 2026

India’s approach to cryptocurrency regulation continues to be shaped by fiscal policy, and the Union Budget 2026–27 reinforces the government’s cautious stance toward digital assets. As crypto adoption expands among retail investors, exchanges, and fintech platforms, budgetary measures signal how authorities intend to regulate this evolving market.

While the budget does not introduce changes to the existing tax structure for virtual digital assets, it strengthens compliance, reporting, and enforcement mechanisms under the income tax framework. These measures reflect a policy preference for transparency and risk mitigation over rapid 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

India has taxed profits from virtual digital assets, including cryptocurrencies, at a flat rate of 30% since the introduction of tax rules in 2022. Under the current law, gains from selling, transferring, or disposing of VDAs are subject to a 30% tax, along with applicable surcharge and cess, with no deduction for most expenses and no allowance for offsetting losses against other income.

In addition, a 1% TDS applies to transactions above the prescribed thresholds. Budget 2026 retained this framework without reducing the 30% tax rate or relaxing the TDS requirement, despite widespread pre-budget discussions and expectations.

Industry associations have advocated for rate rationalisation and loss set-off provisions, arguing that investors should be permitted to offset losses against gains in a manner similar to equity investments. The continuation of the existing regime reinforces a conservative fiscal approach, maintaining a stringent tax structure compared with several international jurisdictions that apply marginal or lower capital gains rates.

This signals to businesses and investors that, absent future policy changes, crypto-related profits will continue to be taxed at a high effective rate.

New Compliance Obligations and Penalties

The Finance Bill 2026, which accompanies Budget 2026, places significant emphasis on enhanced reporting and enforcement for cryptocurrency-related activity. Entities involved in VDAs, including exchanges, intermediaries, and custodians, will face expanded compliance obligations under proposed amendments to the Income-tax Act:

• Daily penalties of ₹200 for delayed submission of required crypto transaction statements.
• Fines of up to ₹50,000 for furnishing incorrect or misleading information.
• Additional penalties, including amounts up to ₹1 lakh, for continued non-compliance.

These measures aim to curb tax evasion, fraud, and opaque market practices while enforcing consistent transaction reporting standards. The reporting framework also aligns with India’s plan to implement the OECD’s crypto-asset reporting framework by 2027, which seeks to enable global data-sharing and transparency.

Persistent non-compliance may also attract prosecution or more severe penalties under tax law, indicating a stronger enforcement posture.

Market Reaction and Investor Sentiment

Investor reaction to the budget announcements has been mixed. Following the budget presentation, market commentary and media reports pointed to short-term uncertainty among crypto traders, many of whom expressed disappointment over the absence of tax relief or incentives.

Market participants had anticipated measures such as loss carry-forward provisions or reductions in TDS rates, which could have encouraged greater retail participation and improved liquidity. In the near term, however, trading activity may remain cautious due to the continuation of the existing tax regime and the introduction of additional compliance requirements, particularly for smaller investors and institutional participants seeking predictable tax treatment.

The longer-term impact will depend on how markets adapt to the reporting framework and whether future budgets address structural concerns around crypto taxation.

Effects on Exchanges and Operating Platforms

The budget increases compliance costs for cryptocurrency exchanges and operating platforms. Companies will need to enhance their data collection, auditing, and reporting systems to meet stricter disclosure and penalty requirements.

Platforms may face daily fines for delayed filings and higher penalties for inaccuracies. This environment could favour larger, well-capitalised firms while placing additional pressure on startups and smaller exchanges that lack robust compliance infrastructure.

At the same time, stronger compliance standards may improve credibility and confidence among institutional investors who have historically been wary of lightly regulated markets.

Regulatory Expectations Going Forward

Budget 2026 reinforces a regulation-by-enforcement approach, keeping cryptocurrency activity firmly within the tax framework while tightening reporting requirements to curb illicit and unreported trading. Key industry demands, including loss set-off provisions, reduced TDS rates, and a dedicated legal framework for crypto assets, remain unaddressed.

Nevertheless, the government’s alignment with international reporting standards points to a long-term trajectory toward greater accountability and formalisation of the crypto market. Many stakeholders view the current budget as laying groundwork for future clarity, particularly with the upcoming implementation of the new Income-tax Act, 2025, scheduled to take effect from April 1, 2026.

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