Finance Minister Nirmala Sitharaman did not announce any revisions to the 1% TDS (tax deducted at source) on crypto transactions or the restriction on offsetting losses. Industry experts believe these policies continue to be a hurdle for investors and traders.
Also Read | Union Budget 2026: FM plans FEMA overhaul, introduces total return swaps for corporate bondsEdul Patel, CEO of Mudrex, said that the Union Budget’s decision to maintain the existing taxation framework for Virtual Digital Assets provides continuity, but the industry was hoping for calibrated reforms to improve market participation and onshore liquidity. Patel further said that while the sector continues to grow despite regulatory and tax challenges, the rationalisation of transaction taxes and enabling loss offsets would have further strengthened India’s competitiveness in the global digital asset economy. “We remain optimistic that continued dialogue between industry and policymakers will help shape a more growth-oriented framework going forward.”
Sharing a similar thought, Nischal Shetty, Founder, WazirX, said the continuation of the 1% TDS and the restriction on loss set-off remain key friction points for users and the ecosystem as these measures continue to impact liquidity, participation, and India’s competitiveness in the global digital asset landscape.
Shetty remains hopeful that future policy discussions will address these concerns in a manner that balances innovation, compliance, growth and ease of doing business.Raj Karkara, COO, ZebPay, said that the Union Budget 2026 retains the current tax framework applicable to Virtual Digital Assets, providing stability for the ecosystem as it matures. Globally, digital assets and Web3 are gaining strong policy and institutional momentum, with several markets in the West taking concrete steps to integrate crypto into their broader financial frameworks.
Long-term policy visibility can help encourage entrepreneurs to build from India, retain emerging Web3 talent, and support the development of compliant, globally competitive digital asset businesses. The industry remains optimistic that continued dialogue and gradual policy evolution will allow India to participate more actively in the global digital asset economy, Karkara added.
The Finance Minister, Nirmala Sitharaman, in her budget 2026 speech, said that to ensure compliance with the provisions of section 509 of the Income-tax Act, 2025, and create a deterrence for non-furnishing of statement or for furnishing inaccurate information in respect of crypto assets in such statement, it is proposed to introduce a penalty provision.
A penalty of Rs 200 per day for non-furnishing of statements and Rs 50,000 for furnishing inaccurate particulars and failure to correct such inaccuracy is proposed to be levied. The budget further mentioned that this amendment will take effect from April 1, 2026.
Ashish Singhal, Co-founder, CoinSwitch said the introduction of specific penalty provisions is a positive milestone for the crypto industry. By mandating a Rs 200 daily penalty for reporting delays and a Rs 50,000 fine for inaccuracies, the Government has formalized high standards of tax compliance and reporting for both users and VASPs.
While compliance and surveillance have tightened, true growth requires economic rationalization to keep Web3 innovation and talent within India, Singhal added.
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Current taxation on cryptocurrency
The Income Tax Act contains key provisions—Sections 115BBH and 194S—that govern the taxation of Virtual Digital Assets (VDAs) such as cryptocurrencies, NFTs, and tokens. VDA gains are taxed at a flat 30%, with a 1% TDS on transactions, while non-trading income may be taxed as per the individual’s income slab.
