Budget proposes penalties for crypto firms over lapses in transaction disclosures

The Union Budget has proposed stricter penalties for crypto platforms that fail to report user transactions accurately, tightening the government’s oversight of digital asset trading.

Under Section 509 of the Income Tax Act, crypto exchanges and intermediaries are required to submit periodic statements detailing crypto-asset transactions to the Income Tax Department (India). While this reporting obligation already existed, enforcement was limited.

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To improve compliance, the government has proposed new penalty provisions effective April 1, 2026. Platforms that fail to file the required statements will face a fine of Rs 200 per day until the information is submitted. In addition, entities that furnish incorrect or misleading details, and fail to correct them, will be liable to a flat penalty of Rs 50,000.

The move will result in increased monitoring of crypto income and reducing tax evasion in the virtual digital asset space. Exchanges such as WazirX and CoinDCX, along with other trading and custody platforms, will need to strengthen their compliance and reporting systems as a result to ensure transactions are reported on time and details furnished are correct.