Central Board of Direct Taxes issues guidance note on crypto tax, transaction reporting

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The Central Board of Direct Taxes (CBDT) has issued a detailed guidance note for Indian crypto platforms and foreign exchanges operating in the country to explain in a simple manner the issues related to reporting taxes and transactions under the provisions of the Income Tax Rules, 2026.

The guidance note reiterates that the primary compliance burden falls on Reporting Crypto-Asset Service Providers (RCASPs), not directly on individual investors. It further explains reporting mechanisms for entities transacting across different jurisdictions which have kicked in with the Union Budget introduced in February 2026.

The Guidance Note is intended to explain the reporting obligations of Reporting Financial Institutions (RFIs) contained in the relevant Rules notified by the Government of India in a simple manner. Given that the Common Reporting Standard (CRS) is developed jointly by participating jurisdictions, including India, working with the OECD, the Commentary on CRS and other relevant materials have also been cited, so as to facilitate their reference by the RFIs, where so required, according to the CBDT statement.

The guidelines further clarify that crypto service providers should not treat a crypto asset user as an individual user, if it benefits or accounts for 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 makes it clear when a crypto service provider transfers payments made in crypto assets from a customer to the merchant for a value greater than USD 50,000 and acts as an agent for the customer, it should report such transfer as a 'Reportable Retail Payment Transaction'.

In the case of the service provider is acting as an agent of the merchant, the transfer will be reported as such and not as a retail transaction. In this case, the customer of the merchant will become the crypto asset user whose transaction will get reported for taxation.

However, with respect to such transfers, the RCASP is required to also treat the customer of the merchant as the Crypto-Asset User and to report the transaction as a Reportable Retail Payment Transaction with respect to the customer.

In case "there are multiple jurisdictions where a nexus exists that are both partner jurisdictions, the jurisdiction with the strongest link should be considered the primary jurisdiction for reporting purposes (i.e. a nexus higher on the list represents a stronger link than a nexus lower on the list)," the note added.

The guidance note also has a set of FAQs to help make the law simpler and clearer.

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