India’s regulatory landscape for digital assets is undergoing a significant transformation, moving from basic taxation toward aggressive global enforcement. The Indian government has confirmed that it will begin the international exchange of cryptocurrency transaction data starting April 1, 2027. This move aligns India with the OECD's Crypto-Asset Reporting Framework (CARF). Under this framework, India will automatically share and receive data with over 60 other jurisdictions to track offshore holdings and curb tax evasion. The Union Budget 2026 has introduced a strict two-tier penalty system to ensure domestic exchanges are ready for this global shift. Starting April 1, 2026, crypto exchanges and intermediaries face a daily penalty of ₹200 for failing to submit required transaction statements. Furthermore, a flat penalty of ₹50,000 will be applied for furnishing inaccurate data or failing to rectify errors. The government is also tightening the definition of Virtual Digital Assets (VDAs) to include decentralized finance (DeFi) protocols and specialized NFTs. The existing tax structure remains rigorous. Investors continue to pay a flat 30% tax on all crypto gains, plus a 4% cess. A 1% Tax Deducted at Source (TDS) remains active on all trades to maintain a clear audit trail. A critical update in the latest budget includes potential prosecution and jail terms of up to two years for entities that fail to deposit collected TDS exceeding ₹50 lakh. Market performance reflects this high-pressure environment. Bitcoin has recently experienced significant volatility, sliding from its October record highs above $126,000 to approximately $74,570 in early February 2026. This 10% year-to-date decline comes as traders navigate a "risk-off" sentiment across global markets, with significant capital shifts noted in precious metals and technology stocks. The Financial Intelligence Unit (FIU-IND) has further reinforced oversight by classifying all VDA service providers as reporting entities under anti-money laundering laws. The government has signaled that technical assistance will be provided to domestic exchanges to upgrade their reporting infrastructure before the 2027 international deadline. This cohesive strategy of heavy penalties and global data sharing aims to eliminate "invisible" trading and bring the crypto sector in line with traditional banking standards.