CBDT’s crypto reporting norms seen increasing transparency

The CBDT has issued a guidance note for the adoption of the CARF, developed by the Organisation for Economic Co-operation and Development (OECD) to extend global tax transparency standards to crypto-asset activities.

The note gives guidance to Reporting Crypto-Asset Service Providers (RCASPs) for compliance with the reporting obligations under section 509 of the Income-tax Act, 2025, and under Rules 241 to 244 and Form 167 of the Income-tax Rules, 2026.

“The guidance note is a timely step in operationalising India’s crypto-asset reporting framework and is aligned with the OECD’s CARF standards,” said Richa Sawhney, Partner – Tax, Grant Thornton Bharat. Sawhney said the note provides practical guidance to RCASPs on their obligations under the Income-tax Act and Rules, and addresses the key facets of implementation, including scope, due diligence, reporting requirements, filing process and penalties.

Under the CARF, crypto exchanges are required to report eligible crypto transactions annually. Experts said this is only a reporting compliance update, not a regulatory measure.

“Importantly, it is a tax transparency and information-reporting measure, not a broader regulation of the legitimacy or permissibility of crypto-asset transactions,” Sawhney said.

In India, cryptocurrency operates in a grey area with no government policy on either banning or regulating such assets. According to reports, the Reserve Bank of India recently called for a policy banning cryptocurrency.

CBDT Chairman Ravi Agrawal said in the guidance note that India’s commitment to combating tax evasion and protecting its revenue base has remained steadfast. “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,” Agrawal said.

Prasenjit Singh, Member (Legislation), CBDT, said that the emergence of crypto-assets has, in a relatively short span of time, created a new class of holdings that can be acquired, held and transferred outside the traditional financial system. These assets were capable of escaping the reporting obligations that apply to financial institutions under the Foreign Account Tax Compliance Act (FATCA) and, subsequently under the Common Reporting Standard (CRS), thereby leaving a gap in the framework of global tax transparency, Singh said in the guidance report.

“The Crypto-Asset Reporting Framework (CARF), developed by the OECD at the request of the G20, was conceived to address this gap by providing for the standardised and automatic exchange of tax-relevant information on transactions in crypto-assets between jurisdictions,” Singh said.

The CBDT’s guidance note defines a “Crypto-Asset” as a “digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions.”

The guidance note applies to all crypto-assets except Central Bank Digital Currencies, specified electronic money products, and crypto-assets for which the RCASP has adequately determined that they cannot be used for payment or investment purposes.

The reporting period for crypto exchanges will be each calendar year starting after the January 1, 2026. The required statements will have to be filed by May 31 of the calendar year following the year to which the information relates, the CBDT said.

According to Grant Thornton Bharat’s Sawhney, the reporting framework differentiates between new and existing users. “For new users, due diligence and valid self-certification are required at onboarding. For pre-existing users as of December 31, 2025, equivalent due diligence must be completed within 12 months from January 1, 2026. This gives service providers a practical transition window,” Sawhney said.