India's CBDT Issues Guidelines for Crypto Asset Reporting Framework
India's crypto industry is embracing the Central Board of Direct Taxes' (CBDT) new Crypto Asset Reporting Framework (CARF), set to take effect in 2026. The framework aims to enhance transparency and pave the way for more comprehensive regulation in the rapidly evolving digital asset sector.
The CBDT has issued guidelines for CARF, which will apply to all crypto transactions from 2026. CARF mandates crypto service providers to identify reportable users and establish their tax residency, aiming to increase visibility over cross-border crypto transactions.
Industry executives, including CEOs from Mudrex and CoinSwitch, believe the framework will foster greater transparency, reduce underreporting, and lay a foundation for broader policy. 'Even though the guidance note is focused on tax reporting rather than regulation, it lays an important foundation for a broader policy framework,' said Edul Patel, chief executive officer of Mudrex.
The framework does not change the existing taxation regime for the sector, but is seen as a significant step towards formal regulation of the digital asset sector in India. The Group of Twenty (G20) mandated the Organisation for Economic Cooperation and Development (OECD) to develop CARF as a dedicated framework for automatic exchange of information on crypto assets.