The Central Board of Direct Taxes (CBDT), Department of Revenue, Ministry of Finance, has released a comprehensive Guidance Note on Crypto-Asset Reporting Obligations under section 509 of the Income-tax Act, 2025. The Guidance Note has been prepared by the Foreign Tax and Tax Research Division of the CBDT to assist Reporting Crypto-Asset Service Providers in understanding and complying with the new reporting framework.
Released on 24 July 2026, the Guidance Note explains the reporting obligations prescribed under section 509 of the Income-tax Act, 2025, Rules 241 to 244 and Form 167 of the Income-tax Rules, 2026. It translates the statutory requirements into practical guidance for crypto-asset exchanges, intermediaries, trading platforms and other covered service providers.
The Guidance Note forms part of India’s continuing efforts to strengthen tax transparency and address the challenges presented by crypto-assets that can be issued, held and transferred outside the traditional financial system and across national borders.
Existing international tax-transparency arrangements, including the Common Reporting Standard and the Foreign Account Tax Compliance Act, primarily cover financial accounts maintained through traditional financial institutions. Crypto-assets may fall outside these conventional reporting channels owing to their decentralised and technology-based nature.
To address this gap, the Organisation for Economic Co-operation and Development developed the Crypto-Asset Reporting Framework, pursuant to a mandate from the G20. CARF provides for the standardised and automatic exchange of tax-relevant information relating to crypto-asset transactions between participating jurisdictions.
India actively contributed to the development of CARF through its participation in the OECD’s Working Party No. 10 and the Global Forum’s CARF Group. India’s G20 Presidency in 2023 also provided momentum to its implementation through the New Delhi Leaders’ Declaration, which called for the swift implementation of CARF and noted the aspiration of participating jurisdictions to commence exchanges by 2027.
CARF is a dedicated international tax-transparency framework under which information on specified crypto-asset transactions is reported annually and exchanged with the jurisdiction or jurisdictions in which the relevant crypto-asset users are resident for tax purposes.
The Guidance Note clarifies that a crypto-asset means a digital representation of value that relies on a cryptographically secured distributed ledger, or similar technology, to validate and secure transactions. The definition is intentionally broad and may include cryptocurrencies and cryptography-based tokens, depending on their features and functions.
The Guidance Note further clarifies that reporting obligations do not necessarily apply to every crypto-asset. Reporting Crypto-Asset Service Providers are required to carry out due diligence and reporting only in respect of Relevant Crypto-Assets covered by the Income-tax Act and the Income-tax Rules.
The determination of whether an asset is a crypto-asset is functional and does not depend merely on the label used to describe it. Accordingly, assets described as cryptocurrencies, security tokens or non-fungible tokens may fall within the definition where they represent digitally transferable value and rely on cryptographically secured distributed-ledger technology.
The new framework places reporting obligations on Reporting Crypto-Asset Service Providers, commonly referred to as RCASPs. An RCASP is an individual or entity that, as a business, provides a service effecting exchange transactions for or on behalf of customers.
The definition covers persons acting as counterparties or intermediaries to crypto-asset exchange transactions and persons making available trading platforms through which such transactions may be effected.
A platform that merely provides bulletin-board functionality for displaying proposed buying, selling or conversion prices, without enabling users to complete transactions, would ordinarily not qualify as an RCASP. Similarly, a person solely developing or selling software would not become an RCASP unless that software is used by the person to provide services effecting exchange transactions for customers.
The Guidance Note explains the circumstances in which an RCASP will have a reporting nexus with India. These include residence for tax purposes in India, incorporation or organisation under Indian law, legal personality or tax-return filing obligations in India and relevant transactions effected through a branch situated in India.
The framework requires RCASPs to identify their crypto-asset users and determine whether such users are reportable persons. A crypto-asset user may be an individual or entity for whom an RCASP carries out a relevant transaction.
In cases where a person acts as an agent, custodian, nominee, signatory, investment adviser or intermediary for another person, the person for whose benefit or account the transaction is undertaken may be treated as the crypto-asset user, subject to the prescribed conditions.
Reportable persons generally include individuals or entities resident for tax purposes in a country or territory outside India. RCASPs must obtain and validate the prescribed information, including tax-residence details, through due-diligence procedures.
The Guidance Note provides a step-by-step compliance framework under which an intermediary is required to determine:
whether it qualifies as an RCASP;
- the jurisdiction in which it is required to report;
- the users to whom due-diligence procedures must be applied;
- the reportable persons and relevant crypto-assets;
- the relevant transactions undertaken by each reportable user; and
- the information required to be furnished to the tax authority.
The compliance flow chart on page 15 of the Guidance Note illustrates this sequential process, beginning with the determination of RCASP status and concluding with the reporting of relevant information after due diligence and identification of reportable persons and transactions.
A Relevant Transaction includes an exchange transaction or a transfer of a Relevant Crypto-Asset. This includes exchanges between Relevant Crypto-Assets and fiat currencies, exchanges between different Relevant Crypto-Assets and prescribed transfers of Relevant Crypto-Assets.
A transfer generally covers the movement of a Relevant Crypto-Asset from or to the address or account of a crypto-asset user, other than movement between accounts maintained by the same RCASP for that user. Transfers may include movement to a private wallet, movement to an account maintained with another service provider and receipt of crypto-assets through an airdrop.
The framework also covers prescribed Reportable Retail Payment Transactions. These include transfers of Relevant Crypto-Assets in consideration for goods or services where the value exceeds USD 50,000, subject to the conditions prescribed in the Rules. In such cases, information relating to the merchant and, where applicable, the merchant’s customer may be reportable.
RCASPs are required to obtain self-certifications from crypto-asset users and apply a reasonableness test to such certifications. Where a self-certification appears incorrect or unreliable, the service provider must obtain a valid self-certification or reasonable explanation and supporting documentation before providing services for relevant transactions.
Where a change in circumstances causes an RCASP to know, or have reason to know, that an existing self-certification is incorrect or unreliable, the RCASP can no longer rely upon it and must undertake the prescribed remedial procedures.
An RCASP may use a service provider or, in appropriate cases, rely on another RCASP for carrying out due-diligence functions, subject to suitable contractual arrangements. However, the ultimate responsibility for compliance remains with the RCASP, and reporting must be made in its name.
Information relating to reportable crypto-asset transactions is required to be furnished in Form 167, titled “Statement to furnish information on transaction of crypto-asset under section 509.” The Guidance Note explains the registration, due-diligence, reporting and compliance procedures relevant to furnishing the statement.
The Guidance Note also contains an extensive set of Frequently Asked Questions addressing practical situations relating to the scope of crypto-assets, identification of RCASPs, reporting nexus, users and controlling persons, self-certification, relevant transactions, filing procedure and compliance monitoring.
The legislative framework supporting crypto-asset reporting in India comprises:
- the definition of crypto-asset under section 2(111)(d) of the Income-tax Act, 2025;
- the reporting obligation under section 509;
- Rules 241, 242, 243 and 244 of the Income-tax Rules, 2026;
- the reporting statement prescribed in Form 167; and
- penalties under section 446 for failure to report or for furnishing inaccurate information.
Where a person required to furnish the statement fails to do so within the prescribed time, the prescribed income-tax authority may impose a penalty of ₹200 for every day during which the failure continues.
A penalty of ₹50,000 may also be imposed where an RCASP furnishes inaccurate information and fails to correct the inaccuracy in accordance with section 509, or fails to comply with the prescribed due-diligence requirements.
The Guidance Note has been issued solely to facilitate compliance. It does not constitute legal advice, and the provisions of the Income-tax Act, 2025 and the Income-tax Rules, 2026 will prevail in case of any inconsistency.
The Guidance Note does not determine the legality, legitimacy or regulatory permissibility of transactions in crypto-assets. Its scope is limited to reporting and exchange of information for the administration of taxes by the relevant jurisdictions.
The release of the Guidance Note marks an important step towards the timely implementation of the Crypto-Asset Reporting Framework in India. It will assist service providers in preparing their systems, customer-documentation processes and reporting arrangements for compliance with the new tax-transparency requirements.
The initiative reinforces the Government of India’s commitment to combating offshore tax evasion, protecting the revenue base and ensuring that technological developments in the digital-asset sector do not create gaps in the international exchange of tax-relevant information.
The Guidance Note can be accessed at: https://www.incometaxindia.gov.in/documents/d/guest/e-book-guidance-note-crypto-asset-reporting-obligations-pdf
