CBDT Released Guidelines for Crypto Asset Reporting in India

The Central Board of Direct Taxes (CBDT) has published a detailed guidance note aimed at helping crypto-asset service providers navigate compliance with the reporting requirements set out under the Income-tax Act of 2025. Importantly, this document does not establish a new taxation regime for digital assets but rather clarifies how crypto exchanges and intermediaries should report transactions in accordance with existing tax legislation.

This guidance is significant as it indicates India’s adoption of the Organisation for Economic Co-operation and Development's (OECD) Crypto-Asset Reporting Framework (CARF), which aims to streamline the automatic exchange of tax-related information on crypto-assets among countries involved. Ravi Agarwal, Chairman of the CBDT, stated, “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.”

The report highlights the necessity for a structured approach to address the risks posed by assets that can be transacted outside conventional financial channels and may evade the reporting obligations that apply to other financial entities. According to Agarwal, the G20 has endorsed the CARF as a vital enhancement to international standards concerning tax information exchange.

The guidance note aims to assist Reporting Crypto-Asset Service Providers (RCASPs) in fulfilling their responsibilities under the Income-tax Act and related rules with clarity and practicality. In defining a crypto-asset, the document describes it as a “digital representation of value” that employs cryptographically secured distributed ledger technology to authenticate transactions.

However, not every digital asset falls under the reporting mandates of the Income-tax Act, 2025, and the Income-tax Rules, 2026. Only “relevant crypto-assets” will necessitate reporting and due diligence from RCASPs. The guidance makes it clear that the classification of a crypto-asset is functional, not based on its label, encompassing various forms such as cryptocurrencies, security tokens, or non-fungible tokens.

Certain categories, such as Central Bank Digital Currencies (CBDCs) and specific electronic money products, are exempt from these reporting requirements. RCASPs must identify reportable users and individuals subject to reporting rules, which include tax residents of other jurisdictions and controlling persons of certain entities.

To fulfil their obligations, RCASPs must assess their customer base to identify reportable users, follow specified due diligence processes, and report pertinent information to tax authorities. The CBDT defines a “reportable retail payment transaction” as any transfer of relevant crypto-assets exceeding a value of $50,000 used for purchasing goods or services.

The CBDT expressed that this guidance will promote consistency among crypto intermediaries in implementing reporting measures while supporting India’s commitment to upholding global standards on tax transparency and information exchange related to crypto-assets.