Budget 2026 Proposes Penalties To Tighten Crypto Transaction Reporting Framework

The Union Budget 2026-27 has proposed a new penalty regime to strengthen reporting discipline across India’s crypto ecosystem.

The move underscores the government’s focus on transparency, accountability, and regulatory compliance in digital asset transactions.

While presenting the Budget in Parliament, Finance Minister Nirmala Sitharaman said the government will introduce penalties for entities that fail to report crypto-asset transactions or submit incorrect details.

The proposal seeks to close existing gaps in reporting and improve oversight of crypto activities.

The new framework aims to ensure compliance with Section 509 of the Income-tax Act, 2025.

It also intends to create a strong deterrent against non-reporting and inaccurate disclosures related to crypto assets.

Under the proposed rules, crypto platforms and other reporting entities will face a penalty of ₹200 per day for failing to furnish prescribed transaction statements within the specified timeline. This provision targets delays in compliance and encourages timely disclosures.

The budget has also addressed the issue of inaccurate reporting. If entities provide incorrect particulars and fail to rectify them within the allowed period, authorities will impose a fixed penalty of ₹50,000.

The government expects this measure to improve data accuracy and reporting integrity.

Explaining the rationale behind the move, Sitharaman said the penalty provisions aim to enforce reporting obligations and discourage non-compliance across the crypto sector.

The Finance Bill clearly links these penalties to reporting requirements under the Income-tax Act, 2025.

The announcement comes at a time when crypto market participants were expecting tax relief or liquidity-related support from the Budget.

Instead, the government has chosen to prioritise regulatory discipline over easing the tax burden.

Despite concerns over tighter rules, several industry stakeholders view the proposal as a step towards regulatory clarity rather than a purely punitive action.

Many believe stricter reporting norms could help integrate crypto assets more closely with India’s mainstream financial system.

Improved transparency and consistent disclosures may also strengthen trust among investors and regulators.

The government has proposed to implement the new penalty provisions from April 1, 2026.

Under the earlier framework, reporting entities submitted crypto transaction statements to the Income-tax Department.

However, the law lacked specific penalties for delayed filings or inaccurate information. The Budget 2026-27 seeks to address this regulatory gap decisively.

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