India Tightens Global Tax Reporting Rules, Bringing Crypto Holdings Under Greater Scrutiny

• CBDT brings crypto assets under India’s global tax reporting framework.
• Crypto exchanges must report user transactions under OECD CARF reporting rules.
• New rules strengthen tax transparency for cross-border crypto asset reporting.

India is taking another step toward integrating crypto into its tax reporting system, this time by aligning its rules with a global framework designed to track digital assets across borders.

The Central Board of Direct Taxes (CBDT) has updated India’s global tax reporting framework to explicitly cover crypto-assets, central bank digital currencies (CBDCs), and certain digital money products. 

The changes bring the country’s reporting standards closer to the OECD’s Crypto-Asset Reporting Framework (CARF), which aims to make cross-border crypto transactions more transparent and harder to use for tax evasion.

Crypto Reporting Moves Beyond Traditional Finance

Until now, India’s Automatic Exchange of Information (AEOI) framework under the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) focused primarily on traditional financial accounts such as bank deposits, investments and insurance products.

Crypto assets created a blind spot because they could be transferred and stored outside the conventional banking system. The CBDT says the new guidance is intended to close that gap by bringing crypto exchanges and other intermediaries into the global reporting network. Under CARF, participating countries will automatically exchange crypto-related tax information with one another from 2027.

What Changes for Crypto Platforms?

The biggest compliance burden falls on Reporting Crypto-Asset Service Providers (RCASPs), a category that includes crypto exchanges and other businesses facilitating digital asset transactions.

These firms will now be required to identify users, determine their tax residency, collect taxpayer identification details where applicable, maintain transaction records, and report crypto transactions to the Income Tax Department. The framework is designed to ensure that crypto transactions receive the same level of scrutiny as traditional financial accounts.

The revised guidance also strengthens due diligence requirements for financial institutions. Banks, custodians, insurers, investment entities, and other reporting financial institutions must conduct additional reviews for high-value accounts holding more than $1 million before determining their reporting obligations.

Why CARF Matters

Unlike earlier reporting frameworks, CARF is built specifically for digital assets.

It covers crypto-to-fiat transactions, crypto-to-crypto trades, and other qualifying crypto activities that previously sat outside traditional reporting systems. By requiring jurisdictions to automatically exchange taxpayer information, the framework aims to reduce opportunities to hide digital assets offshore or avoid tax obligations by moving funds across borders.

India’s adoption of CARF also reflects commitments made during its G20 Presidency, where member nations agreed to begin exchanging crypto tax information under the framework from 2027.

What It Means for India’s Crypto Ecosystem

For investors, the new framework does not introduce a new crypto tax. Instead, it significantly increases reporting and transparency around digital asset holdings and transactions.

For exchanges and custodians, however, compliance obligations are set to expand considerably as they transition into globally recognized reporting entities. More broadly, the move signals that India is treating crypto less as an isolated asset class and more as part of the global financial system. 

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