While the Union Budget 2026-27 did not bring up cryptocurrencies and virtual digital assets as a prominent area of focus, Nirmala Sitharaman proposed increasing the reporting compliance burden for crypto startups, and a related penalty framework for non-compliance. Under the proposals, entities dealing in cryptocurrencies and virtual assets could face a penalty of INR 200 per day for non-furnishing of transaction statements and a flat INR 50,000 for furnishing inaccurate particulars or failing to correct them. The FM said the move was meant “to ensure compliance with section 509 of the Income-tax Act, 2025 and create a deterrence for non-furnishing of statements or furnishing inaccurate information in respect of crypto assets.” At the moment, there is no penal provision in the Income-tax Act, 2025 to ensure accurate and timely disclosures by crypto exchanges and trading platforms. The new rules, if accepted, will come into effect from April 1, 2026. “The introduction of specific penalty provisions is a positive milestone for the crypto industry. Now, the government has formalised high standards of tax compliance and reporting for both users and VASPs. This validates the “Compliance-First” model of Indian platforms like CoinSwitch, shielding users from reporting risks and aligning with compliance goals,”… Read MoreInc42 Media
