India’s 2026-2027 Union Budget introduces new financial penalties for cryptocurrency exchanges and intermediaries that fail to accurately report user transactions. The move strengthens enforcement of existing tax laws while leaving the country’s controversial 30% capital gains tax and 1% transaction levy unchanged. The changes come amid reports that over 70% of Indian crypto trading volume has shifted to offshore platforms.
India’s latest budget formalizes a penalty regime to enforce crypto transaction reporting by exchanges. Entities failing to submit required statements will face a daily fine of Rs. 200, or approximately $2.50.
A separate flat penalty of Rs. 50,000 (about $625) applies for reporting inaccurate information or failing to correct errors. Raj Karkara, COO of ZebPay, stated that these measures “strengthen accountability while bringing digital asset reporting closer in line with established financial standards.”
The penalties target reporting entities like exchanges, not individual users directly. However, the budget did not alter India’s existing crypto tax structure, which includes a 30% tax on gains and a 1% transaction tax.
Nischal Shetty, Founder of WazirX, noted the tax policy “continues to impact liquidity, participation and India’s competitiveness.” The enforcement push follows data showing significant trading migration offshore.
A report by KoinX found that 72.7% of India’s crypto trading volume, worth around $6.1 billion, moved to foreign exchanges in FY25. Tax authorities have simultaneously increased scrutiny of undisclosed crypto assets.
The Central Board of Direct Taxes (CBDT) said it identified undisclosed virtual digital assets worth roughly $106 million last December. The new penalty framework is scheduled to take effect from April 1, 2026.
