The Central Board of Direct Taxes (CBDT) has issued a detailed guidance note clarifying how crypto exchanges and other virtual digital asset (VDA) service providers should comply with India's new crypto reporting framework under the Income-tax Rules, 2026. The guidance provides operational clarity on the recently introduced reporting requirements and aligns India's framework with the OECD's Crypto-Asset Reporting Framework (CARF). Under the new framework, crypto exchanges and other Reporting Crypto-Asset Service Providers (RCASPs) will be required to collect additional information from users, including their tax residency status and Taxpayer Identification Number (TIN), wherever applicable. The entities will also have to maintain detailed transaction records and submit annual reports to the Income Tax Department. The guidance further explains how exchanges should identify reportable users, determine the account holder in different scenarios, and handle cross-border transactions where more than one jurisdiction may have reporting obligations. It also distinguishes between crypto-assets, central bank digital currencies (CBDCs), and specified electronic money products for reporting purposes. The clarification is expected to help crypto exchanges prepare their compliance systems before the reporting rules come into effect. Market participants will need to strengthen their KYC and record-keeping processes to meet the new requirements. While the guidance does not introduce any new tax on virtual digital assets, it lays down the operational framework for reporting crypto transactions and sharing information with tax authorities. For India's crypto industry, the latest guidance marks another step towards a more regulated environment. Exchanges will now need to invest in compliance infrastructure and ensure that customer onboarding and reporting processes are aligned with the CBDT's expectations under the new regime. Bareback Media has recently raised funding from a group of investors. Some of the investors may directly or indirectly be involved in a competing business or might be associated with other companies we might write about. This shall, however, not influence our reporting or coverage in any manner whatsoever. You may find a list of our investorshere.
