Crypto reporting to tax authorities (CARF)

The Crypto-Asset Reporting Framework (CARF) is a global standard approved by the OECD in 2022 for the automatic exchange of tax information about crypto transactions between countries. It is the crypto equivalent of the Common Reporting Standard used for bank accounts: exchanges and other crypto service providers collect tax residence details from users and report their transactions to tax authorities, which share the data internationally.

India committed to CARF, and the Finance Act, 2025 inserted section 285BAA into the Income-tax Act, 1961 from 1 April 2026. It requires prescribed reporting entities to register with the tax department, carry out due diligence to identify crypto users and furnish information on crypto-asset transactions in a prescribed statement. The same Act widened the definition of VDA to cover crypto-assets based on cryptographically secured distributed ledgers or similar technology.

For investors, this means holdings on foreign exchanges are increasingly visible to the Indian tax department.