The law presently criminalises the offence of failure to credit tax deducted at source to the account of the Central government
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DULEZIDAR
Non-furnishing or inaccurate furnishing of information related with transactions of crypto assets will lead to penalty, the Union Budget has proposed.
According to the Income Tax Department, a new penalty section is proposed to be inserted in the Income-tax Act, 2025 for failure to furnish statement ( ₹200 per day for which the failure continues) and for furnishing inaccurate information ( ₹50,000) in a statement on transaction of crypto-asset under section 509 of the Income-tax Act, 2025.
“It is proposed to be introduced to ensure compliance on part of the respective Reporting Entities as regards furnishing of statement and refraining them from furnishing inaccurate information in a statement, “ the Department said adding that the amendments are proposed to be made effective from April 1, 2026.
“By amending Section 446, the government signals a stricter compliance environment for crypto-asset reporting, increasing accountability and encouraging timely, accurate disclosures. These measures are expected to enhance transparency in the crypto ecosystem and deter non-compliance,” said Amit Maheshwari, Managing Partner at AKM Global
Neeraj Agarwala, Partner, Nangia & Co LLP clarified that income arising from the transfer of Virtual Digital Assets (VDA) continues to be taxed at a special rate of 30 per cent, with no allowance for set-off of losses or deduction of expenses, except the cost of acquisition. There is no change in the taxability of VDAs.
The law presently criminalises the offence of failure to credit tax deducted at source to the account of the Central government. The provision covers multiple categories of TDS, including tax deducted on winnings from lotteries and crossword puzzles, winnings from online games, benefits or perquisites arising from business or profession, and consideration paid for transfer of a virtual digital asset.
The proposed amendment seeks to rationalise the penal consequences under these provisions. While failure to deduct or deposit tax in respect of winnings from online games and consideration for transfer of virtual digital assets presently attracts rigorous imprisonment ranging from three months to seven years along with fine, it is now proposed that transactions where such winnings or consideration are wholly in kind shall be excluded from criminal liability. “This acknowledges the practical difficulty in discharging tax obligations in non-cash transactions,” Agarwala said
Published on February 1, 2026
