India's Adoption of the OECD Crypto-Asset Reporting Framework: What It Means for Crypto Users
Dec, 16 2025
Starting April 1, 2027, millions of Indian crypto users will be subject to a new global tax reporting system that automatically shares their crypto transaction data with the Indian tax authorities. This isn’t a local rule-it’s part of the OECD Crypto-Asset Reporting Framework (CARF), a coordinated international effort signed on by 67 countries to shut down offshore tax evasion through digital assets. India’s commitment, announced in September 2024, marks a turning point in how crypto is treated in the country-not as a speculative gamble, but as a financial asset that must be tracked like bank accounts or stocks.
What Is the OECD Crypto-Asset Reporting Framework?
The OECD’s CARF is a global standard designed to make crypto transactions as transparent as traditional banking. Think of it like the Common Reporting Standard (CRS) that India has used since 2015 to exchange bank account details with other countries-but now extended to Bitcoin, Ethereum, and other digital assets. Under CARF, crypto exchanges, wallet providers, and even some decentralized finance platforms must collect and report user data: names, addresses, tax IDs, account numbers, and details of every transaction-buying, selling, trading, or transferring crypto. The data is sent in a strict XML format, standardized by the OECD in October 2024. It doesn’t go straight to the tax department. Instead, it flows through a secure network between tax authorities in participating countries. If you’re an Indian resident holding crypto on a foreign exchange like Binance or Kraken, that exchange will report your activity to its local regulator, who then sends it to India’s Income Tax Department. This isn’t theoretical. Countries like the U.S., UK, Germany, Japan, and Australia are all on board. India’s move means it’s joining the majority of major economies that now have the tools to see what you’re doing with crypto-even if you think you’re hiding it overseas.Why India Chose CARF Now
India didn’t wake up one day and decide to track crypto. The pressure built over years. After the Supreme Court lifted the RBI ban on crypto in 2020, the market exploded. By 2024, over 100 million Indians held digital assets, according to industry estimates. But the tax system couldn’t keep up. Many users moved funds to offshore exchanges to avoid reporting. Some didn’t file taxes at all. The 30% crypto tax introduced in 2022 helped, but without visibility into foreign accounts, enforcement was nearly impossible. CARF fixes that. It closes the loophole. When India signed the Multilateral Competent Authority Agreement (MCAA) for crypto in 2025, it created a legal channel to receive data from other countries. That means if you bought Bitcoin on a U.S.-based exchange and never told India, they’ll find out-automatically. The timing wasn’t random. India pushed CARF hard during its 2023 G20 Presidency. The New Delhi Leaders’ Declaration called for global adoption, and 58 countries agreed to start exchanges by 2027. For India, this was about more than taxes-it was about sovereignty. In a world where digital assets move across borders instantly, having a national tax system that can’t see cross-border flows is a vulnerability. CARF gives India the same power over crypto that it has over bank accounts.What You Need to Report and When
The rules kick in in two phases. First, from April 1, 2026, Indian-based crypto exchanges and financial institutions must start collecting user data under Section 285BAA of the Income Tax Act. This means if you trade on CoinSwitch, ZebPay, or any Indian platform, they’ll start gathering your personal details and transaction history. They won’t report it yet, but they’ll be storing it. Then, on April 1, 2027, the automatic exchange begins. That’s when Indian authorities start receiving data from foreign exchanges and sending out data about Indian residents holding assets abroad. The data includes:- Your full legal name and residential address
- Your Permanent Account Number (PAN) or equivalent tax ID
- Names and addresses of foreign reporting entities (like Binance or Coinbase)
- Account numbers or identifiers for your crypto wallets
- Details of every transaction: date, type (buy, sell, trade), asset type, quantity, and value in local currency
Who’s Affected and How
This isn’t just for big investors. If you’ve ever bought $100 worth of Ethereum on a foreign app, held it for a year, and sold it for $200, you’re in scope. The framework doesn’t care about the size of the transaction-it cares about the existence of the transaction. Indian residents are the focus. That includes anyone who’s lived in India for more than 182 days in a financial year, regardless of citizenship. Non-residents with Indian-sourced crypto income are also covered, but the main target is Indian citizens holding assets overseas. For crypto exchanges, compliance is a huge lift. Smaller platforms may struggle to build systems that can handle XML reporting, track cross-border transactions, and verify user identities under OECD standards. Larger exchanges like CoinSwitch and WazirX have already started upgrading their backend. Many are partnering with compliance tech firms to automate reporting. For users, the impact is mixed. Some worry about privacy. Others see it as legitimacy. After years of regulatory uncertainty-from the RBI ban to the 30% tax-CARF brings clarity. You know where you stand. No more guessing if your offshore trades are safe.What Happens If You Don’t Comply?
The tax department won’t need to catch you. The system will catch you. If your foreign exchange reports a $50,000 sale and your tax return shows $0, the system flags it. You’ll get a notice. You’ll have to prove the money came from somewhere else-or pay up. Penalties are severe. Under existing tax laws, failure to report crypto income can lead to:- 30% tax on gains, plus 30% penalty (total 60%)
- Interest at 1% per month on unpaid tax
- Prosecution for tax evasion if the amount exceeds ₹10 lakh
What This Means for the Indian Crypto Market
The market is adapting. Exchanges are shifting from “crypto as a hobby” to “crypto as a regulated asset class.” Many are now offering tax reports, KYC upgrades, and compliance tools to users. Some are even partnering with tax software firms to auto-generate filings. Investors are reacting too. Some are moving funds to domestic platforms to reduce exposure to foreign reporting. Others are holding cash until the dust settles. A few are exploring legal structures-like setting up offshore entities-but experts warn that CARF is built to see through those tricks. The OECD designed it specifically to block tax avoidance via shell companies or non-resident accounts. Long-term, CARF could make India’s crypto market more stable. Institutional investors hate uncertainty. Banks won’t touch crypto until regulation is clear. CARF gives them that clarity. It signals that India isn’t trying to ban crypto-it’s trying to control it. And that might attract more traditional finance players into the space.How to Prepare
You don’t need to panic. But you do need to act.- Keep records of every crypto transaction from January 1, 2026, onward. Date, platform, amount, asset type, and value in INR.
- If you use foreign exchanges, make sure your identity is fully verified. Use your real name and PAN.
- Start tracking your crypto gains and losses. Use free tools like Koinly or CoinTracker to generate reports.
- Don’t assume offshore = invisible. CARF is designed to catch exactly that.
- Consider consulting a tax professional who understands crypto reporting under CARF. This isn’t your regular income tax advisor.