“To ensure compliance with the provisions of section 509 of the Income-tax Act, 2025, and create a deterrence for non-furnishing of a statement or for furnishing inaccurate information in respect of Crypto assets, in such a statement, it is proposed to introduce a 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 an inaccuracy is proposed to be levied,” she noted. The amendment is said to take effect from April 1, 2026.
Ashish Singhal, the co-founder of CoinSwitch, argued that the penalty provisions are a positive milestone for the crypto industry.
“By mandating a ₹200 daily penalty for reporting delays and a ₹50,000 fine for inaccuracies, the Government has formalized high standards of tax compliance and reporting for both users and VASPs. This validates the ‘Compliance-First’ model of Indian platforms like ours, shielding users from reporting risks and aligning with compliance goals,” he said.
Similarly, Edul Patel, the CEO of Mudrex, noted that the proposed penalties for non-disclosure and misreporting of crypto assets reflect a broader policy shift towards strengthening compliance and transparency in India’s digital asset ecosystem.
Well-defined measures to address non-compliance strengthen accountability while bringing digital asset reporting closer in line with established financial standards.
“This clarity enables exchanges and market participants to build compliance frameworks with greater confidence and operational certainty. Previously, the Financial Intelligence Unit-India (FIU-IND) updated its AML and CFT guidelines in January 2026, classifying crypto exchanges and VDA service providers as Reporting Entities under the PMLA. Taken together, these measures reflect a cohesive regulatory direction that builds trust, enhances accountability, and supports the long-term, responsible growth of the digital asset industry in India,” Raj Karkara, COO, ZebPay, said.
However, while compliance and surveillance have tightened, true growth requires economic rationalization to keep Web3 innovation and talent within India.
“The 1% TDS, lack of offset for losses, and the 30% flat capital gains rate create an asymmetric environment for genuine participation. These measures risk driving Indian capital toward non-compliant offshore platforms, leaving users vulnerable to legal and financial scrutiny,” Singhal warned.
Published on February 1, 2026
