Kolkata: The government has decided to crack the whip on crypto investors for non-disclosures. In her speech of Budget 2026, finance minister Nirmala Sitharaman has announced strict penalty for non-compliance of not furnishing of statement on such investments. According to data from CoinSwitch, Gen Z, who are aged between 18–25 years and millennials, who are between 26–35 years, have come to dominate India’s crypto market and these two age groups contribute more than 70% of total investments.
“To ensure compliance to the provisions of section 509 of the Act and create a deterrence for non-furnishing of such statement or for sharing inaccurate information in such statement, it is proposed to introduce penalty provision. Penalty of Rs. 200 per day for non-furnishing of statement and Rs. 50,000 for furnishing inaccurate particulars and failure to correct such inaccuracy is proposed to be levied,” she mentioned in her speech.
Getting tough
The government has always maintained that crypto-assets which are borderless and can easily be used for money laundering are ideal assets to be exploited for subversive activities. The proceeds of these assets can be used for smuggling narcotics, arms and even for funding any terrorist activities. It seems this is the primary logic of being more strict with timely disclosure of documents related to investments in this sector. In short, investors must provide statements regarding crypto-asset transactions to the income tax department within the specified time limits.
While the penalty for furnishing inaccurate information, or failure to rectify any inaccuracy within the specified time, will attract a penalty of Rs 50,000, the delay for failure to furnish the information will be Rs 200 every day.
It has been proposed to carry out amendments to section 446 of the Income Tax Act to incorporate new penalty provisions. The amendment is supposed to come into effect from the first day of the next financial year — April 1, 2026.
Tax on crypto-assets
A 30% tax on income from crypto currency or virtual digital assets is levied under section 115 BBH of the Income Tax Act 1961. There is no provision for any exemption. It is immaterial whether the period of investment is for a month or a year. Besides, according to sector 194S, 1% TDS is applicable on every transaction above Rs 10,000. And an additional 4% health and education cess is also levied on the total tax liability. There has been no change in this tax rates.