CBDT issues guidance note on crypto reporting in line with OECD framework
The Central Board of Direct Taxes (CBDT) issued a detailed guidance note on crypto-asset reporting obligations, operationalising India's adoption of the OECD's Crypto-Asset Reporting Framework (CARF)
The guidance note is directed at Reporting Crypto-Asset Service Providers (RCASPs), including crypto exchanges and other digital-asset intermediaries, clarifying their compliance obligations
The note does not introduce any new tax on crypto assets; it sets out due diligence, KYC, and annual reporting requirements for service providers rather than changing tax rates for investors
The framework requires RCASPs to determine users' tax residency, maintain records of reportable transactions, and furnish annual information through a prescribed form
OECD's Crypto-Asset Reporting Framework (CARF)
CARF is a global tax transparency standard developed by the Organisation for Economic Co-operation and Development to enable automatic exchange of information on crypto-asset transactions between tax jurisdictions, addressing the gap left by crypto assets that can be held or transferred outside traditional financial institutions.
Key Details
- Developed by the OECD in 2022 as an extension of the automatic exchange of information architecture first established through the Common Reporting Standard (CRS, 2014), which covers traditional financial accounts
- As of late 2025, over 50 jurisdictions, including India, had committed to CARF, with first data exchanges targeted for 2027
- India has committed to begin cross-border exchange of crypto transaction data under CARF from April 2027, with the CARF Multilateral Competent Authority Agreement (MCAA) expected to be formalised around 2026
- Under CARF, RCASPs must conduct due diligence to identify users and their tax residency, and annually report specified crypto-asset transactions to their domestic tax authority, which then exchanges this data with partner jurisdictions
The CBDT guidance note is the domestic implementation step that operationalises India's CARF commitment, instructing Indian crypto exchanges and intermediaries on exactly how to comply before cross-border data exchange begins.
India's Domestic Legal Framework for Virtual Digital Assets (VDAs)
India introduced a distinct tax regime for Virtual Digital Assets — covering cryptocurrencies, NFTs, and similar assets — through the Finance Act, 2022, well before the current CARF-aligned reporting push, establishing both a tax rate and a reporting/withholding mechanism.
Key Details
- Section 115BBH of the Income-tax Act, 1961 imposes a flat 30% tax (plus applicable surcharge and cess) on income from transfer of VDAs, with losses from VDA transfers barred from being set off against any other income or carried forward
- Section 194S mandates 1% TDS on payment for transfer of a VDA, applicable where aggregate transaction value exceeds ₹10,000 in a financial year (₹50,000 for specified persons)
- The Income-tax Act, 2025 is set to replace the Income-tax Act, 1961 with effect from 1 April 2026; crypto-asset reporting obligations under the new regime are placed under Section 509 of the 2025 Act, read with the newly notified Income-tax Rules, 2026
- The reporting mechanism under the new guidance is built around a prescribed annual return, referred to as Form 167, to be furnished by RCASPs
The CARF-aligned reporting obligations sit alongside, and are administratively distinct from, the existing 30% tax (Section 115BBH) and 1% TDS (Section 194S) regime — the guidance note concerns information reporting for cross-border transparency, not a change to the tax liability of crypto investors.
Automatic Exchange of Information: From FATCA/CRS to CARF
Automatic Exchange of Information (AEOI) is a global tax cooperation mechanism under which countries share financial account information about each other's tax residents to curb offshore tax evasion. CARF extends this established AEOI architecture to crypto assets, which had remained outside the scope of the original CRS framework designed for bank and custodial accounts.
Key Details
- The Common Reporting Standard (CRS), developed by the OECD in 2014, requires financial institutions to report account information of foreign tax residents; India has participated in CRS-based exchange since 2017
- CARF (2022) is structurally modelled on CRS but tailored to crypto-specific intermediaries (exchanges, brokers, certain wallet providers) since crypto assets are not typically held through traditional "financial institutions" as defined under CRS
- India's participation places it alongside major economies in closing the crypto-asset transparency gap in global tax information exchange
The guidance note extends India's existing AEOI commitments, first built through CRS participation, into the crypto-asset space via CARF, ensuring that crypto holdings do not become a blind spot in cross-border tax transparency.
- CARF developed by the OECD: 2022; over 50 jurisdictions committed as of late 2025, including India
- India's targeted start for cross-border crypto data exchange under CARF: April 2027
- VDA transfer income tax rate under Section 115BBH: flat 30% (plus surcharge and cess); no loss set-off or carry-forward permitted
- TDS on VDA transfers under Section 194S: 1%, applicable above ₹10,000 (₹50,000 for specified persons) in aggregate annual value
- Income-tax Act, 2025 replaces the Income-tax Act, 1961 with effect from 1 April 2026; crypto reporting obligations placed under Section 509 of the new Act
- Reporting form prescribed for RCASPs under the new framework: Form 167
- CRS (predecessor AEOI framework for financial accounts) adopted by OECD in 2014; India participating since 2017