India Implements CARF, Tightens Tax Reporting for Digital Currencies and CBDCs

India has taken a significant step towards implementing the Crypto-Asset Reporting Framework (CARF) by revising its international tax reporting guidelines to include certain digital currencies, central bank digital currencies (CBDCs), and digital money products.

The move aims to combat tax evasion and avoidance in the global digital asset markets. The revised guidance was issued by the Central Board of Direct Taxes (CBDT) and affects India's Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) implementation rules.

Under the new framework, reporting financial institutions are required to apply enhanced due diligence to high-value accounts with balances exceeding $1 million. This includes additional review procedures before such accounts are classified for reporting.