India’s Finance Minister Nirmala Sitharaman left the country’s stringent cryptocurrency tax regime unchanged in the recent Budget 2026 presentation. The punitive 30% flat tax on crypto income and the 1% Tax Deducted at Source (TDS) on every transaction remain in place, a framework that industry officials say has driven most of India’s trading volume offshore. The budget did reduce the maximum criminal penalty for TDS defaults from seven years to two years in prison, allowing courts to convert sentences into monetary fines.
India’s crypto investors received no tax relief as Finance Minister Nirmala Sitharaman maintained the existing digital asset taxation framework. The status quo preserves a flat 30% tax on virtual digital asset income and a 1% Tax Deducted at Source, first introduced in February 2022. This regime has reportedly pushed nearly three-quarters of India’s $6.1 billion in crypto trading volume to offshore platforms.
The unchanged policy continues to prohibit investors from offsetting losses against other income. The 1% TDS also makes high-frequency and thin-margin trading strategies commercially unviable on domestic Indian exchanges. Pranav Agarwal, an independent director at Jetking Infotrain India, told reporters the government’s stance “signals that they are still choosing to wait and watch before they decide on next steps.”
CA Sonu Jain of 9Point Capital said expectations of unchanged taxes stemmed from the government’s current enforcement focus. Jain noted India is coordinating policy discussions at the G20 level, suggesting tax revisions would likely follow any new comprehensive regulations. While tax rates were untouched, the budget did reduce criminal liability for TDS defaults.
The maximum imprisonment for such defaults was lowered from seven years to two years, with courts now permitted to convert sentences into monetary penalties. Jain called this a significant positive for non-compliant peer-to-peer traders. However, the budget introduced new financial penalties for failing to report crypto asset transactions accurately.
Entities providing inaccurate information or failing to correct it will face a penalty of $546. Sudhakar Lakshmanaraja, founder of the advocacy body Digital South Trust, stated that taxation was introduced as “an interim step until clear and comprehensive regulations are defined.” He said the current approach reflects policy maturity and strengthens compliance amid market volatility.
