Union Budget 2026 Tightens Crypto Compliance: Penalties Announced for Non-Reporting and Misreporting

India’s Union Budget 2026 has marked a decisive step toward tighter regulation of the cryptocurrency sector, with Finance Minister Nirmala Sitharaman announcing new compliance measures aimed at improving transparency and accountability in digital asset transactions.

Presented in the Lok Sabha on Sunday, the budget introduces penalties for failure to report or for inaccurate reporting of crypto-asset transactions. The provisions signal the government’s intent to integrate digital assets more closely with India’s existing financial and tax reporting framework. The new rules are scheduled to come into force from April 1, 2026.

New Crypto Reporting Obligations Under Union Budget 2026

According to Annexure Part B of the Union Budget 2026, which outlines amendments related to Direct Taxes, the government has added specific provisions under the section titled “Rationalising Penalty and Prosecutions.”

Clause (x) introduces a formal penalty mechanism for individuals and entities that fail to furnish statements or submit inaccurate information related to crypto-asset transactions.

The move makes accurate and timely disclosure of crypto transactions mandatory, placing digital assets on a similar compliance footing as traditional financial instruments such as securities and mutual funds.

Penalty Structure Explained

The budget document lays out a two-tier penalty framework:

• ₹200 per day penalty for failure to submit the required crypto-asset transaction statements. This daily fine will continue until the information is furnished.
• ₹50,000 lump-sum penalty in cases where the submitted information is found to be incorrect, misleading, or inaccurate.

These provisions are aligned with Section 509 of the Income Tax Act, 2025, and are designed to discourage non-compliance while improving the quality of transaction-level data available to tax authorities.

Strengthening Financial Oversight of Digital Assets

The introduction of defined penalties reflects the government’s broader strategy to bring cryptocurrencies within the scope of India’s formal financial system. Over recent years, digital assets have already been subject to taxation, transaction reporting requirements, and withholding obligations.

With the Union Budget 2026 proposals, crypto reporting standards are being aligned more closely with established tax and compliance norms. This is expected to reduce ambiguity for taxpayers, enhance regulatory oversight, and improve confidence in the sector.

Industry Welcomes Clarity on Compliance

The crypto industry has largely responded positively to the announcement, viewing it as a constructive step rather than an overly restrictive one.

Raj Karkara, Chief Operating Officer of ZebPay, described the budget’s crypto provisions as a “clear and constructive signal” for the digital asset ecosystem. He noted that emphasizing accurate and timely reporting strengthens accountability and ensures crypto transactions are treated on par with traditional financial assets.

According to industry leaders, clearer compliance expectations will help exchanges and service providers build more robust reporting systems, potentially improving institutional participation in the long term.

Impact on Investors and Crypto Platforms

For individual crypto investors, the new rules highlight the importance of maintaining detailed transaction records and ensuring complete disclosure in tax filings. Even unintentional errors could now attract penalties.

Crypto exchanges and service providers, meanwhile, may need to enhance their internal compliance infrastructure, including data validation, reporting tools, and user education initiatives, to align with the updated regulatory framework.

A Move Toward Regulatory Maturity

The crypto-related measures in Union Budget 2026 suggest a shift away from regulatory uncertainty toward a more mature and structured approach. Rather than limiting innovation, the government appears focused on building a transparent, accountable environment that supports growth while safeguarding the broader financial system.

As India’s digital asset ecosystem continues to evolve, these reforms may play a key role in shaping a more compliant and institutionally credible crypto market.