India has expanded the reach of its international tax reporting system to cover cryptocurrencies, central bank digital currencies (CBDCs) and some other digital money products. This initiative, guided by the Central Board of Direct Taxes (CBDT), aligns India’s reporting standards with the Organisation for Economic Co-operation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF), a global effort designed to boost cross-border tax transparency.
The update does not add a new tax on cryptocurrencies. Rather, it extends the reporting obligations of transactions involving cryptocurrencies, making it less easy to hide cryptocurrencies across jurisdictions. The CBDT said that the update reflects crypto assets under the current Automatic Exchange of Information (AEOI) system under the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS).
Crypto Platforms Face Stricter Compliance Requirements
Reporting Crypto-Asset Service Providers (RCASPs), cryptocurrency exchanges and other digital asset intermediaries will be the most affected by the new framework. As per the new guidelines, the entities are required to identify their customers, ensure their tax residency, obtain details of taxpayers, if applicable, keep records of transactions and submit reports to the Income Tax Department in respect of eligible crypto transactions.
The OECD’s CARF framework is expected to facilitate the automatic exchange of crypto-asset tax information from 2027 among participating jurisdictions.
The CBDT has also enhanced the due diligence norms for financial institutions. The banks, custodians, insurers, mutual funds and other reporting entities are required to carry enhanced reviews of high-value accounts over $1 million before deciding if they are required to report them.
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Greater Transparency for India’s Crypto Ecosystem
CARF has been designed specifically for digital assets, unlike previous reporting systems that mainly reported on bank accounts, investment products and insurance policies. It includes crypto-to-fiat transactions, crypto-to-crypto trades and other qualifying digital asset activities, which had been previously out of the scope of the conventional financial reporting frameworks.
The policy also aligns with the commitments made during India’s G20 Presidency, pledging to start CARF-based information sharing from 2027 onwards as part of the commitments by the members concerned.
The regulations are stricter than before, as India’s regulators move to impose more rigorous regulations on the crypto market. In a report by the government, only 246,000 of the 645,000 individuals who engaged in cryptocurrency trading during the financial year ending March 2023 reported such activity in their income tax returns, reflecting continued compliance issues.
For investors, the updated framework does not change India’s existing 30% tax on crypto gains. Rather, it greatly enhances transparency of digital asset ownership and cross-border transactions. The adjustments introduce higher compliance obligations for exchanges and custodians as crypto assets become increasingly part of the global financial reporting framework.
Disclaimer : Crypto News India does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
