India adopts OECD crypto reporting rules for exchanges

India’s Central Board of Direct Taxes (CBDT) has published detailed guidance requiring cryptocurrency exchanges to report user transactions to tax authorities, formally implementing the OECD’s Crypto-Asset Reporting Framework (CARF). The rules, issued under the Income-tax Act 2025, do not establish new taxes on virtual digital assets. Instead, they dictate exactly how intermediaries must share data with the government.

The framework targets so-called Reporting Crypto-Asset Service Providers (RCASPs), obligating them to identify and report foreign users. Specifically, exchanges must flag tax residents of jurisdictions outside India, as well as the controlling persons of certain entity users that do not qualify as active entities or are otherwise ineligible for exemptions.

CBDT Chairman Ravi Agarwal noted the necessity of the rules in curbing offshore tax evasion. "Assets that can be issued, held and transferred outside the traditional financial system, across national borders, and may escape the reporting obligations applicable to financial institutions," Agarwal said, pointing to the G20 mandate that drove the OECD to develop the framework.

For market professionals, the guidance establishes a functional definition of crypto-assets that relies on economic reality rather than marketing labels. "The definition of crypto asset is thus functional and does not depend on labels that may be used to describe it, such as cryptocurrency, security token, or non-fungible token," the note said.

However, not all digital assets trigger these reporting duties. The rules explicitly exclude central bank digital currencies, specified electronic money products, and crypto-assets that an exchange reasonably determines cannot be used for payments or investments.

To comply, exchanges must conduct rigorous due diligence to separate reportable persons from exempt users. Once an individual or entity is classified as reportable, the service provider must furnish identifying information and detailed transaction data to the tax authorities.

The guidelines also carve out a specific threshold for retail transactions. A "reportable retail payment transaction" is defined strictly as a crypto transfer used to purchase goods or services where the value exceeds $50,000.

The move signals India's intent to close a historical gap in cross-border tax oversight. By adopting CARF, Indian crypto firms will now operate under the same automatic exchange standards as traditional banks, reducing the sector's utility for tax evasion.