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Informist, Monday, Jul. 27, 2026

 

NEW DELHI – The Central Board of Direct Taxes has issued a detailed guidance note for the adoption of the Crypto-Asset Reporting Framework, or CARF, a global standard being developed under the Organisation for Economic Co-operation and Development. The Crypto-Asset Reporting Framework is a dedicated global tax transparency framework that mandates automatic exchange of tax-relevant information on transactions in crypto-assets in a standardised manner with the jurisdiction of residence of taxpayers on an annual basis. Under this framework, India will automatically exchange cross-border crypto transaction data from Apr. 1, 2027. 

 

The increasing use of crypto-assets led to concerns among tax administrations worldwide about their potential to evade tax compliance, CBDT said. It was observed that assets capable of being transferred and held outside the traditional financial sector could avoid being captured and reported by the Common Reporting Standard and thereby reduce the effectiveness of automatic exchange of information. "This led to a quest for measures that can plug this loophole," the department said. 

 

India does not have any legislation to regulate cryptocurrencies, and only maintains partial oversight. During its G20 presidency in 2023, India had called for a global framework to regulate such assets and in 2024, the government had planned to issue a discussion paper on its crypto stance, which is yet to be published. Currently, global crypto exchanges can operate in India after registering with the Financial Intelligence Unit-India, tasked with due diligence to check money-laundering risks.

 

"India's commitment to combating tax evasion and protecting its revenue base has remained steadfast. The rapid growth of crypto-assets, however, brought with it a fresh challenge," CBDT Chairman Ravi Agrawal said in the guidance note. "I am confident that this document will serve as a useful reference for crypto-asset service providers and officers alike, and will facilitate the timely and effective implementation of the reporting framework for crypto-asset transactions in India and reinforce India's standing as a pillar of global tax transparency, both today and in the years to come," he said. 

 

Even before the data-sharing initiative starts, the government had begun tightening its compliance framework for crypto platforms operating in India, with the Union Budget for 2026-27 (Apr-Mar) proposing a new set of penalties. From Apr. 1, entities that fail to submit required statements on crypto transactions face a daily penalty of INR 200. In cases of incorrect reporting or failure to rectify errors, a flat penalty of INR 50,000 applies. "These norms are to basically prepare (crypto) exchanges to adhere to data-sharing obligations," Agrawal had told Informist in an interview. This move will "create a deterrence for non-furnishing of statement or for furnishing inaccurate information in respect of crypto assets in such statement," Finance Minister Nirmala Sitharaman had said in her Budget speech. 

 

The freshly announced penalties come on top of a steep tax regime introduced in 2022 – 30% tax on crypto gains and 1% tax deducted at source on transactions. 

 

The guidance note defines a crypto-asset as a "digital representation of value" that uses a cryptographically secured distributed ledger or similar technology to validate and secure transactions. It said that while the definition of crypto-assets is intended to cover a broad range of assets, not all are subject to the scope of the reporting obligations under the Income Tax Act, 2025 and Income-tax Rules, 2026. 

 

The reporting obligations exclude central bank digital currencies, specified electronic money products – which can be a digital representation of a single fiat currency, and crypto-assets that Reporting Crypto-Asset Service Providers have reasonably determined cannot be used for investment or payment purposes.  End 

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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