India’s upcoming crypto tax regime, effective April 1, 2026, will maintain the current 30% tax on profits from cryptocurrencies and a 1% TDS on transactions, but introduces much stricter compliance rules and broader reporting requirements.
Key changes and ongoing policies:
Tax Rate: Cryptocurrency profits continue to be taxed at 30%, with no offsets for losses or additional deductions except the cost of acquisition.
TDS (Tax Deducted at Source): A 1% TDS applies to crypto transactions exceeding ₹10,000 for individuals or ₹50,000 for businesses.
Expanded Definition: The legal definition now includes all crypto assets relying on cryptographic security and distributed ledger technology, covering cryptocurrencies, NFTs, and similar tokens.
Reporting Requirements: Section 285BAA, effective 2026, makes it mandatory for banks, exchanges, and intermediaries to report crypto transactions and holdings directly to tax authorities. Detailed information on both past and future transactions must be submitted in a prescribed format.
Undisclosed Earnings: Unreported crypto assets found in audits or searches will be classified as “undisclosed income” and taxed at higher rates, with enforcement powers strengthened to include search, seizure, and block assessments.
Compliance Enforcement: Entities failing to report or correct errors in the mandated statements within 30 days risk penalties, and authorities can trigger investigations for compliance failures.
Surveillance Upgrade: The Central Board of Direct Taxes (CBDT) will use digital forensics, artificial intelligence, and international standards (OECD Crypto-Asset Reporting Framework) to trace unreported crypto gains and offshore holdings, further tightening tax surveillance and evasion controls.
No reduction in rates or relief for traders is planned; instead, the focus is on increased transparency, tighter regulation, and comprehensive oversight, impacting all domestic and international crypto activity involving Indian residents.