Centre Tightens Crypto Rules Under Income Tax Act. Is Broader Policy Next?

India has taken another step towards tightening oversight of the cryptocurrency sector, this time through tax reporting rather than regulation.

The Central Board of Direct Taxes (CBDT) has issued a detailed guidance note explaining how crypto exchanges and other virtual digital asset (VDA) service providers must comply with their reporting obligations under the Income Tax Act. The move operationalises the OECD's Crypto-Asset Reporting Framework (CARF), an international standard designed to improve tax transparency by enabling authorities to track crypto transactions more effectively.

The guidance comes just days after the Parliamentary Standing Committee on Finance urged the government to examine the need for a comprehensive statutory and regulatory framework for virtual digital assets. Together, the developments indicate that India is gradually moving towards a more structured approach to overseeing the fast-growing crypto industry.

Industry players believe the latest guidance is an important milestone, even though it does not introduce new taxes or regulate crypto assets.

Edul Patel, CEO of Mudrex, said the CBDT's guidance note is "a significant step towards building a more transparent and credible digital asset ecosystem in India... "By aligning reporting standards with the OECD's Crypto-Asset Reporting Framework (CARF), India is bringing crypto-assets into a structured financial reporting framework without changing the existing tax regime," Patel said.

He added that while the guidance is focused on tax reporting rather than regulation, it lays the groundwork for a broader policy framework. According to Patel, stronger reporting standards will equip policymakers to design balanced regulations that protect investors while encouraging innovation. "The industry has long advocated for regulatory clarity, and this marks another meaningful step towards a comprehensive framework for digital assets in India," he said.

Echoing similar views, Vimal Sagar Tiwari, Co-Founder of CoinSwitch, said the guidance provides much-needed operational clarity for crypto service providers. "The operationalisation of the OECD's Crypto-Asset Reporting Framework (CARF) is an important milestone that aligns India with evolving global standards on tax transparency," Tiwari said.

He noted that a standardised reporting framework strengthens the integrity of the crypto ecosystem by making it harder to underreport or conceal taxable transactions through compliant platforms. According to him, the move will benefit responsible investors, compliant exchanges and regulators alike by fostering greater transparency, accountability and trust across the digital asset ecosystem.