India Issues Crypto Reporting Rules to Combat Tax Evasion

The Central Board of Direct Taxes released a 198-page guidance note on July 27, 2026, to align India's cryptocurrency reporting with the Organisation for Economic Co-operation and Development's Crypto-Asset Reporting Framework (CARF). This move operationalizes India's adoption of the CARF, an international system involving over 50 countries designed to automate the exchange of offshore crypto transaction data to combat tax evasion.

The guidelines shift the primary compliance burden from individual investors to Reporting Crypto-Asset Service Providers (RCASPs). These providers must now perform customer due diligence, verify tax residency, and annually submit transaction details to tax authorities using Form 167 under Section 509 of the Income-tax Act, 2025. Notably, any transfer of crypto-assets for goods or services exceeding $50,000 is classified as a reportable retail payment transaction. Central Bank Digital Currencies are excluded from these reporting obligations.

While the guidance does not introduce new taxes—maintaining the 30% tax on gains and 1% tax deducted at source—it significantly increases the ability of authorities to perform data-driven verification. Reporting for transactions occurring in 2026 is expected to begin in 2027. The framework includes a hierarchy of nexus to determine reporting jurisdictions for cross-border entities, ensuring that assets transferred outside traditional financial systems are captured.