India Implements Global Tax Transparency for Crypto-Asset Service Providers

The Indian government has released a guidance note outlining the requirements for crypto-asset service providers to report on their transactions. This move is in line with the Crypto-Asset Reporting Framework (CARF) developed by the Organisation for Economic Co-operation and Development (OECD). CARF aims to establish automatic, standardized exchange of crypto transaction data across participating countries to address tax evasion risks in decentralized digital assets.

The guidance note explains that the framework applies to cryptocurrencies and other cryptography-based tokens, including those used for payment or investment purposes. It also covers standard cryptocurrencies, utility tokens, marketplace NFTs, and crypto derivatives. However, it excludes central bank digital currencies (CBDCs), specified electronic money products, and non-payment/non-investment assets.

The note outlines the obligations of Reporting Crypto-Asset Service Providers (RCASPs) under Section 509 of the Income-tax Act, 2025, which requires them to conduct due diligence, identify reportable users and transactions, and annually report specified crypto-asset information. The framework also provides a set of FAQs intended to address practical questions that RCASPs are likely to encounter in implementing their obligations.