The Union Budget 2026, presented in the Lok Sabha on Sunday by Finance Minister Nirmala Sitharaman, has introduced significant new provisions aimed at strengthening compliance in India’s growing digital asset ecosystem. Among the key announcements are penalties for non-furnishing and inaccurate reporting of crypto-asset transactions, marking another step toward tighter regulation and accountability in the crypto space.
The proposed measures, outlined in the official Union Budget document, seek to align crypto-asset reporting with the country’s broader financial and taxation standards. According to the government, the new rules will come into effect from April 1, signaling a clear intent to bring digital assets firmly within the regulatory framework.
New Reporting Rules for Crypto Assets Explained
Under Annexure Part B of the Union Budget 2026, which covers amendments relating to Direct Taxes, the government has introduced specific provisions under the section titled “Rationalising Penalty and Prosecutions.” Clause (x) explicitly mentions the introduction of a penalty provision for non-furnishing or furnishing inaccurate information in statements related to crypto-asset transactions.
The proposal makes it mandatory for individuals and entities dealing in crypto assets to submit accurate and timely information regarding their transactions. Failure to comply will now attract financial penalties, reinforcing the importance of transparency in the digital asset ecosystem.
Details of the Proposed Penalties
As per the budget document, the government has proposed a penalty of ₹200 per day for failure to furnish statements related to crypto-asset transactions. This daily penalty will continue until the required information is submitted, creating a strong incentive for timely compliance.
In addition, if the information furnished is found to be inaccurate or misleading, the individual or entity concerned may face a lump-sum penalty of ₹50,000. The provision is being introduced in adherence to Section 509 of the Income Tax Act, 2025, and is intended to act as a deterrent against non-compliance and misreporting.
By clearly defining penalties, the government aims to close loopholes and ensure that crypto transactions are reported with the same level of accuracy as other financial instruments.
Bringing Crypto Closer to Financial Standards
The new rules reflect the government’s broader strategy of integrating digital assets into the formal financial system. Over the past few years, India has taken gradual steps toward regulating cryptocurrencies through taxation, reporting requirements, and compliance obligations.
With the Union Budget 2026 proposal, crypto-asset reporting is being brought closer in line with established financial and tax reporting standards, reducing ambiguity for taxpayers and regulators alike. The move is expected to enhance trust, improve data accuracy, and provide authorities with better visibility into crypto-related economic activity.
Industry Reaction to Budget 2026 Crypto Proposals
The proposed penalties have been met with a largely positive response from crypto experts and market veterans, who see the move as constructive rather than restrictive.
Reacting to the announcement, Raj Karkara, Chief Operating Officer of ZebPay, stated that the Union Budget 2026 sends a “clear and constructive signal” to India’s crypto ecosystem. He emphasized that the focus on accurate and timely reporting strengthens accountability while ensuring that digital asset transactions are treated on par with traditional financial assets.
According to Karkara, the clarity provided by these measures will help crypto exchanges and market participants design stronger compliance frameworks that align with India’s financial system. This, in turn, could contribute to greater institutional confidence and long-term stability in the sector.
What This Means for Crypto Investors and Exchanges
For crypto investors, the new provisions underscore the importance of maintaining accurate records of transactions and ensuring full disclosure in tax filings. Any lapse in reporting, whether intentional or accidental, could now lead to financial penalties.
For exchanges and service providers, the proposal highlights the need to strengthen internal reporting systems, data accuracy, and user compliance mechanisms. With clearer rules in place, the industry may see improved standardization and better coordination with regulators.
A Step Toward Regulatory Maturity
The crypto-related announcements in Union Budget 2026 indicate a shift from ambiguity toward regulatory maturity. Rather than discouraging participation, the government appears focused on creating a transparent and accountable framework that supports innovation while safeguarding the financial system.
As the rules come into effect from April 1, stakeholders across the crypto ecosystem will be watching closely to see how the new compliance requirements are implemented and enforced.
