Central Board of Direct Taxes (CBDT) issues guidance note on crypto transaction reporting, taxation. It lays down the reporting and tax compliance requirements of Indian crypto platforms and foreign exchanges dealing with Indian crypto investors under the Income-tax Rules, 2026.
The guidance note does not create any direct tax. Instead, it operationalizes the reporting requirements under Section 509 of the Income-tax Act, which places the onus of reporting on crypto-asset service providers, not individual investors.
The guidance note also indicates India’s adoption of the OECD Crypto-Asset Reporting Framework (CARF), which is a global standard for tax transparency involving over 50 jurisdictions.
As per CBDT, the guidance note provides guidance to Reporting Crypto-Asset Service Providers (RCASPs) in fulfilling their reporting obligations under Section 509 of the Income-tax Act, 2025 and Rules 241 to 244 read with Form 167 of the Income-tax Rules, 2026.
Thus, the Board clarified that the guidance note is not a directive on the ‘lawfulness or otherwise of crypto-asset transactions’ and that the OECD’s Commentary on Crypto-Asset Reporting Framework (CARF) should serve as a reference for reporting crypto-asset transactions.
Reporting under CARF is envisaged from tax years commencing in calendar year 2026, with the first reports due in 2027. This is consistent with India’s gradual adoption of CARF through a series of amendments to the Income-tax Rules during the last fiscal year. Exchanges will have to comply with enhanced customer due diligence, including tax residency classification, and reporting standards as per CARF.
The Union Budget 2026 proposed that a shortfall in reporting would be subject to a penalty of Rs 200 per day and Rs 50,000 for incorrect reporting of transactions.
Thus, the guidance note does not entirely address the concerns but marks progress in clarifying the obligations of crypto exchanges. Individual investors will have more transparency on the reporting process in the short term as the guidance note provides details on how their transactions will be processed domestically and reported to foreign tax authorities in the future.
Source: incometaxindia.gov
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