India has moved to operationalise a new compliance framework for crypto asset reporting, requiring exchanges and other digital asset intermediaries to collect users’ tax residency and taxpayer identification details and submit annual transaction reports to the Income Tax Department. The framework aligns India’s crypto reporting architecture with the OECD’s Crypto Asset Reporting Framework, a global information-sharing standard designed to help tax authorities track reportable crypto transactions across jurisdictions.
The Central Board of Direct Taxes has issued a detailed guidance note for reporting crypto asset service providers under the Income Tax Act, 2025. The document sets out how reporting entities should conduct customer due diligence, determine users’ tax residency, collect prescribed identification details, maintain records of reportable transactions, and furnish annual reports to tax authorities. The framework is expected to support automatic exchange of information with participating jurisdictions, broadly mirroring the global approach already used for financial account reporting under the Common Reporting Standard.
The new rules represent a shift from India’s earlier tax treatment of virtual digital assets toward a more structured information architecture for crypto transactions. India already taxes gains from virtual digital assets and applies tax deducted at source on qualifying transactions. The latest framework adds a reporting layer that can give tax authorities a more complete view of domestic and cross-border crypto activity, especially where assets move outside traditional banking channels.
The guidance clarifies that it explains reporting obligations under the notified rules and draws on OECD material to assist reporting entities. It also states that if there is any inconsistency, the Income Tax Act and rules will prevail. The document does not determine the legitimacy or permissibility of crypto assets and does not amount to a broader regulatory framework for crypto trading. That distinction is important because India’s crypto policy has continued to separate taxation, reporting and market regulation.
For exchanges and other intermediaries, the framework will require changes across onboarding, know-your-customer workflows, data storage, customer classification, transaction monitoring and annual reporting systems. User tax residency collection can also create operational complexity when customers have multiple jurisdictions, incomplete documentation, or changing residency status. The annual reporting requirement will likely require stronger internal controls, audit trails and data governance practices, particularly for platforms handling high transaction volumes.
India will begin sharing data under the framework from the next financial year. The implementation timeline gives reporting entities a limited window to update systems, train compliance teams and prepare customer communication processes. As crypto activity becomes more visible to tax authorities, digital asset platforms operating in India will face a more formal compliance environment built around tax transparency, cross-border reporting and record-based accountability.
