CBDT clarifies crypto tax reporting rules for Indian, foreign platforms
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New Delhi: The Central Board of Direct Taxes (CBDT) has issued a detailed guidance note for Indian crypto platforms and foreign exchanges operating in the country, explaining in simple terms the reporting of taxes and transactions under provisions of the Income Tax Rules, 2026.
The guidance note reiterates that the primary compliance responsibility rests with Reporting Crypto-Asset Service Providers (RCASPs), rather than directly with individual investors. It also explains reporting mechanisms for entities conducting transactions across different jurisdictions, which came into effect following the Union Budget presented in February 2026.
According to a CBDT statement, the guidance note is aimed at simplifying the reporting obligations of Reporting Financial Institutions (RFIs) under the relevant Rules notified by the Government of India.
As the Common Reporting Standard (CRS) was developed jointly by participating jurisdictions, including India, in cooperation with the Organisation for Economic Co-operation and Development (OECD), the guidance note also refers to the CRS Commentary and other relevant materials to assist RFIs in understanding and complying with the requirements, where necessary.
The guidelines further clarify that a crypto service provider should not treat a "crypto asset user" as the individual user if that person is acting for the benefit of, or on behalf of, another individual or entity as an agent, custodian, nominee, signatory, investment advisor or intermediary.
"Instead, the individual or entity on whose behalf the Crypto-Asset User relationship is in place should be treated as the Crypto-Asset User, and identification should be carried out on that basis," the guidance note states.
The note also clarifies the reporting requirements when a crypto service provider transfers crypto-asset payments from a customer to a merchant for a value exceeding $50,000.
If the service provider acts as an agent for the customer, the transfer should be reported as a "Reportable Retail Payment Transaction". However, if the service provider acts as an agent of the merchant, the transfer should be reported accordingly and not as a retail transaction. In such cases, the merchant's customer will be treated as the "crypto asset user" whose transaction is subject to reporting for tax purposes.
The guidance further states that, for such transfers, the RCASP is also required to treat the merchant's customer as the Crypto-Asset User and report the transaction as a Reportable Retail Payment Transaction in respect of that customer.
In cases where multiple jurisdictions have a nexus with the transaction and all are partner jurisdictions, the jurisdiction with the strongest connection should be treated as the primary jurisdiction for reporting purposes. The note specifies that a nexus higher on the prescribed list represents a stronger link than one lower on the list.
The guidance note also includes a set of frequently asked questions (FAQs) aimed at making the law and related compliance requirements simpler and clearer.
With IANS inputs