CBDT Issues Crypto Reporting Guidance For Exchanges Under Income-Tax Act

The Central Board of Direct Taxes (CBDT) has released a guidance note on crypto-asset reporting obligations under the Income-tax Act, 2025. The 198-page document outlines reporting requirements for crypto-asset service providers and provides guidance on the reporting of crypto transactions.

The note provides details for Reporting Crypto-Asset Service Providers on their reporting obligations under Section 509 of the Income-tax Act, 2025 and Rules 241 to 244 of the Income-tax Rules, 2026. It also refers to the Crypto-Asset Reporting Framework (CARF) and related materials developed with the participation of the OECD to help service providers understand the reporting requirements.

The guidance note sets out the due diligence, reporting, record-keeping and compliance requirements that Reporting Crypto-Asset Service Providers (RCASPs) must follow under the Income-tax Act, 2025. It does not introduce new tax provisions or determine the legality or regulatory status of crypto-asset transactions.

CBDT Highlights Need For Greater Crypto Tax Transparency

“The rapid growth of crypto-assets, however, brought with it a fresh challenge,” CBDT Chairman Ravi Agrawal said in the foreword to the guidance note.

He added that such assets can be issued, held and transferred outside the traditional financial system and may escape reporting obligations applicable to financial institutions under the CRS and FATCA frameworks. Ravi noted, “This Guidance Note has been prepared to assist Reporting Crypto-Asset Service Providers in understanding and discharging their obligations under the Income-tax Act and Income-tax Rules in a clear and practical manner.”

It also states that information reported by RCASPs will be automatically exchanged with tax authorities in the crypto-asset user’s jurisdiction of residence under applicable international agreements for tax purposes.

Crypto-Assets Covered Under The Framework

The guidance note defines a crypto-asset as “a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions.” It states that the reporting framework covers cryptocurrencies, crypto-asset derivatives and non-fungible tokens (NFTs) traded on marketplaces.

The document excludes Central Bank Digital Currencies (CBDCs), specified electronic money products redeemable at par value in a single fiat currency, and crypto-assets that RCASPs determine cannot be used for payments or investment.

The note requires Reporting Crypto-Asset Service Providers (RCASPs), such as eligible crypto exchanges and other covered service providers, to collect self-certifications such as a user’s name, address, tax residence, Taxpayer Identification Number (TIN), and date and place of birth or incorporation. It also requires service providers to verify the information against AML and KYC records.

The document states that self-certifications must be updated within 90 days if there is a change in circumstances. It also requires records and supporting documents to be retained for at least seven tax years after the relevant reporting period.

It also covers transfers of relevant crypto-assets, including transfers involving external wallet addresses, as well as reportable retail payment transactions involving crypto-assets valued above USD 50,000.