New Delhi: In a major step towards strengthening tax transparency and improving oversight of digital asset transactions, the Central Board of Direct Taxes (CBDT) has issued a comprehensive 198-page guidance note outlining reporting obligations for crypto-asset service providers under India’s new Income-tax framework. The move aligns India’s reporting standards with the Organisation for Economic Co-operation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF), paving the way for the automatic exchange of crypto-related tax information with participating jurisdictions from next year.
The guidance note has been issued to assist Reporting Crypto-Asset Service Providers (RCASPs), including crypto exchanges and other intermediaries, in complying with reporting requirements prescribed under Section 509 of the Income-tax Act, 2025, as well as Rules 241 to 244 and Form 167 of the Income-tax Rules, 2026.
According to the CBDT, the guidance aims to provide clarity on the due diligence and reporting responsibilities of entities dealing in crypto-assets. However, the Board has clarified that the guidance note should not be interpreted as validating or determining the legal status or permissibility of crypto-asset transactions in India. Its sole objective is to facilitate tax reporting and compliance.
CBDT Chairman Ravi Agrawal, in the foreword to the guidance note, highlighted that the rapid expansion of crypto-assets has created fresh challenges for tax administrations worldwide. He said India’s commitment to combating tax evasion and safeguarding its revenue base remains firm, adding that the guidance note has been designed to help reporting entities understand and fulfil their obligations under the new legal framework in a practical and transparent manner.
The OECD’s Crypto-Asset Reporting Framework defines crypto-assets as digital representations of value that rely on cryptographically secured distributed ledgers or similar technologies to validate and secure transactions. The definition covers cryptocurrencies as well as various cryptography-based digital tokens.
The CARF introduces a structured reporting regime for crypto-asset service providers by requiring them to identify users and report specified crypto transactions to tax authorities. The information collected will include transaction-level details that are relevant for tax purposes, thereby expanding the scope of financial reporting beyond traditional banking and investment systems.
A key feature of the framework is the automatic exchange of information between participating tax authorities. Once transaction data is submitted to domestic tax authorities, it will be shared with tax authorities in the jurisdictions where crypto users are tax residents, provided an international agreement enabling such exchange is in place. The mechanism is intended to curb tax evasion involving cross-border crypto holdings and transactions.
The development follows the G20’s mandate to the OECD to create a dedicated framework for the automatic exchange of tax information relating to crypto-assets. India actively participated in drafting these international standards through the OECD’s Working Party and the Global Forum’s CARF Group.
Prasenjit Singh, Member (Legislation), CBDT, noted that crypto-assets had previously escaped reporting requirements applicable to conventional financial institutions under frameworks such as the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS). He said CARF has been designed to bridge this gap by establishing a globally standardised reporting system for crypto transactions.
Tax experts believe the guidance note significantly raises the importance of maintaining accurate records, even though it does not introduce any additional filing obligations for taxpayers. Amit Agarwal, Senior Partner at Nangia & Co LLP, said taxpayers should continue reporting crypto income under existing provisions of the Income-tax Act while ensuring that records of purchases, sales, transfers, wallet movements and exchange statements are properly maintained. He added that the information disclosed in income tax returns should remain consistent with records maintained by crypto exchanges.
Experts further observed that India’s adoption of CARF brings the country’s reporting standards in line with internationally accepted OECD norms, strengthening cross-border cooperation in tax administration. They said the new reporting architecture will provide tax authorities with greater visibility into crypto transactions that were previously difficult to monitor because such assets could be transferred or held outside the traditional financial system.
With the implementation of the guidance note, crypto exchanges and other reporting entities will play a central role in ensuring compliance with India’s evolving tax reporting regime, while taxpayers dealing in digital assets are expected to maintain greater transparency and documentation in their crypto-related financial activities.
