Jan 8, 2026

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India’s Tax Authorities Warn of Crypto Risks Ahead of 2026 Budget

India's tax authorities have raised concerns about the risks associated with cryptocurrencies ahead of the February 2026 Union Budget, aligning with the Reserve Bank of India's stance.

Key Concerns

Challenges in monitoring and taxing crypto activities due to features like borderless transfers and pseudonymous wallet addresses.
The Finance Ministry aims to tighten oversight on decentralized platforms, privacy-focused systems, and offshore exchanges.
Increased scrutiny is expected for FIU-registered exchanges due to reports of crypto-related laundering.
Irregularities at centralized exchanges include excessive leverage and insider trading.

Crypto Taxation in India

India imposes a flat 30% tax and an additional 1% TDS on crypto trades, one of the highest globally.
The 2025 Union Budget allows retrospective audits for undisclosed crypto gains with penalties up to 70%.
Plans to use AI and global data-sharing under the Crypto-Asset Reporting Framework to cross-verify TDS data.
Focus on developing an “RBI-guaranteed” digital currency instead of decentralizing digital assets.