The Finance Bill, 2026 proposes a specific penalty framework to enforce compliance with reporting obligations for transactions in crypto-assets under section 509 of the Income-tax Act, 2025. While section 509 mandates prescribed reporting entities to furnish statements containing information on crypto-asset transactions, there was no dedicated penalty provision to deter non-compliance or inaccurate reporting. To address this gap, section 446 is proposed to be substituted to introduce monetary penalties. A penalty of ₹200 per day is prescribed for failure to furnish the required statement within the stipulated time, continuing until compliance. Additionally, a fixed penalty of ₹50,000 is proposed where inaccurate information is furnished in the statement and the inaccuracy is not corrected, or where due diligence requirements are not complied with. These measures aim to strengthen the reporting regime, ensure data accuracy, and improve regulatory oversight of crypto-asset transactions. The amendment will take effect from 1 April 2026 and apply prospectively.
Penalty provision for non-furnishing of statement or furnishing inaccurate information in a statement on transaction of crypto-assets
Section 509 of the Act provide for obligation to furnish information on transaction of crypto-asset. As per the said section, prescribed reporting entity has the obligation to furnish information in respect of transactions in a crypto asset in a statement.
2. To ensure compliance to the provisions of section 509 of the Act and create a deterrence for non-furnishing of such statement or for sharing inaccurate information in such statement, it is proposed to introduce 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 inaccuracy is proposed to be levied.
3. Accordingly, it is proposed to amend section 446 of the Act to provide penalty provisions for non-furnishing of statement and for furnishing inaccurate information in the statement.
4. The amendment will take effect from the 1st day of April, 2026.
[Clause 87]
Extract of Relevant Clauses of Finance Bill, 2026
Clause 87 of the Bill seeks to substitute section 446 of the Income-tax Act, 2025 relating to failure to get accounts audited.
The proposed new section provides for penalty for failure to furnish information or for furnishing inaccurate information on transaction of crypto-asset.
Sub-section (1) of the proposed section seeks to provide that if any person who is required to furnish a statement in respect of transaction of crypto-asset under section 509(1), fails to furnish such statement within the time as provided by rules under the said section, the income-tax authority as may be provided by rules under that section may impose on him, a penalty of ₹ 200 for every day during which such failure continues.
Sub-section (2) of the proposed new section seeks to provide that the said income-tax authority may impose a penalty of ₹ 50000 on a person required to furnish a statement under sub-section (1) of the section 509, if such person provides inaccurate information in the statement and fails to remove such inaccuracy as per section 509(4) or fails to comply with due diligence the requirement under section 509(5).
This amendment will take effect from 1st April, 2026.
Extract of Relevant Amendment Proposed by Finance Bill, 2026
87. Substitution of new section for section 446.
For section 446 of the Income-tax Act, the following section shall be substituted, namely:—
“446. Penalty for failure to furnish information or for furnishing inaccurate information on transaction of crypto-asset.
(1) If any person who is required to furnish a statement in respect of a transaction of a crypto-asset under section 509(1), fails to furnish such statement within the time prescribed under the said section, the prescribed income-tax authority under that section may impose on him, a penalty of ₹ 200 for every day for which such failure continues.
(2) The prescribed income-tax authority may impose a penalty of ₹ 50000 on a person referred in sub-section (1), if such person—
(a) provides inaccurate information in the statement and fails to remove such inaccuracy as per section 509(4); or
(b) fails to comply with due diligence the requirement under section 509(5).”.
