Companies Using Cryptoassets Must Prepare for India’s Tax Shift

The cryptoasset market has grown and integrated quickly with traditional economic systems, and jurisdictions are transforming their tax transparency practices and the way they exchange information for tax purposes.

Financial regulators and tax administrations realized they have limited access to cryptoasset transactions, as they mostly fall outside the scope of the common reporting standards, which typically apply to traditional financial assets.

This prompted the Organization for Economic Cooperation and Development, along with the G20, to develop the cryptoasset reporting framework, or CARF, that could ensure the collection and automatic exchange of information on cryptoasset transactions.

India hasn’t yet formally committed to adopting CARF but is actively aligning its domestic tax laws with CARF’s provisions to integrate cryptoassets into its tax and regulatory frameworks.

Multinational companies operating in India’s crypto or digital asset space should prepare for this change by reviewing their data systems, user onboarding processes, and reporting frameworks.

Shifting Obligations

CARF puts the reporting obligation on the service providers—such as exchanges, wallets, and platforms that facilitate transactions between cryptoassets and fiat currencies—to collect and report detailed information about cryptoasset transactions. CARF also has set out clear due diligence procedures for reporting entities to identify cryptoasset users and determine their tax jurisdiction.

This development marks a leap forward in bringing greater transparency and consistency to global cryptoasset transactions. By setting clear standardized rules for reporting and information sharing between countries, CARF helps create a more predictable regulatory environment—something that benefits both governments and businesses operating in this space.

India already has introduced a special regime for taxation of virtual digital assets that includes cryptoassets, in which gains arising from transfer of VDAs are taxed at a flat rate of 30% (plus applicable surcharge and cess) as well as a 1% withholding tax on VDA purchases from resident sellers.

India also amended its income tax law, in the Finance Act, 2025, to expand the definition of VDAs to align it with CARF’s broader scope of cryptoassets.

Provisions on reporting of transactions for this new VDA category also have been introduced in domestic tax law. This new reporting requirement essentially requires the prescribed reporting entities to furnish specified details of cryptoasset transactions with the income tax authorities.

Detailed rules for this reporting requirement—such as the nature of details to be furnished, how such details are to be maintained, and other procedural aspects like the reporting period, reporting format—will be announced by the government in due course.

The rules also will provide the due diligence required by the prescribed reporting entities to identify any cryptoasset user or owner.

What’s Next

There is a growing global consensus on the importance of a robust tax reporting framework: The G20, in its New Delhi Declaration of September 2023 , emphasized the importance of expediting CARF adoption, recognizing the need for a globally unified approach to cryptoasset regulation.

According to the OECD’s update, as of May 27, 68 jurisdictions have committed to implementing CARF. Of those, 52 have committed to undertaking first information exchanges by 2027, and 16 have committed to do the same by 2028.

Entities involved in cryptoasset transactions should be ready for these changes and ascertain what is required to comply with CARF’s new obligations.

Key priorities should include ensuring that user identification (know your customer), transaction tracking, and data retention processes meet expected due diligence requirements, and that systems are adaptable to OECD reporting formats.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Raghav Bajaj is counsel in the direct tax practice group in the Mumbai office of Khaitan & Co.

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