The Finance Bill, 2026 proposes penalties for reporting entities that fail to file, or file inaccurate, statements on crypto-asset transactions under section 509 of the Income-tax Act, 2025: Rs 200 a day for non-filing and Rs 50,000 for inaccurate information not corrected. It also decriminalises failure to pay TDS on crypto transfers made wholly in kind. The 30% tax and 1% TDS on crypto are unchanged.
Why it matters: India's crypto policy keeps moving through tax administration, not market regulation, and this Budget made the reporting side enforceable.
Reporting penalties. Section 509 of the Income-tax Act, 2025 requires prescribed reporting entities to file statements on crypto-asset transactions. The Bill amends section 446 to add a penalty of Rs 200 a day for not filing, and Rs 50,000 for inaccurate information or failing to correct it (clause 87). Effective 1 April 2026.
Prosecution for TDS defaults. Section 476 makes it an offence to fail to pay tax deducted at source on consideration for a virtual digital asset. The Bill removes criminal liability where the consideration was wholly in kind, and reduces punishment in other cases on a scale graded by the amount of tax.
The Bill leaves the 30% tax on crypto gains and the 1% TDS on transfers where they are. The Finance Act, 2026 received assent on 30 March 2026. This item is based on the Bill as introduced, not the enacted text, which passed with amendments.
Implications
The penalty gives teeth to the transaction reporting that section 509 already required. The amounts are small for large exchanges but make persistent non-filing costly for smaller ones, and give the tax department a simple enforcement tool.
The industry had asked for a lower TDS rate and the ability to set off losses. Neither is in the Bill, so the tax cost of trading on registered Indian exchanges is unchanged.
What to watch
The rules prescribing who must report under section 509 and in what form, and the enacted text of section 446.