India has significantly expanded its global tax reporting framework by including specified crypto-assets, central bank digital currencies (CBDCs), and digital money products under updated FATCA and Common Reporting Standard (CRS) rules. According to reports from The Economic Times, the Central Board of Direct Taxes (CBDT) has revised India's implementation guidance, bringing these digital financial products within the scope of international tax reporting for the first time.
The revised framework introduces tighter due diligence obligations for reporting financial institutions, particularly for high-value accounts. As reported by The Economic Times, institutions must perform additional checks on accounts with balances exceeding $1 million before classification for reporting. These enhanced procedures are designed to strengthen account classification and tax reporting before financial information is exchanged with foreign jurisdictions under the Automatic Exchange of Information (AEOI) framework.
The updated guidance establishes comprehensive reporting requirements for financial institutions including banks, mutual funds, insurance companies, custodians, and other investment entities. According to the CBDT guidance, these institutions must identify reportable accounts, verify customers' tax residency, and report financial information as part of India's international tax reporting commitments. The framework also provides updated procedures for validating tax residency and identifying reportable accounts across all covered financial institutions.
The revised reporting framework follows several regulatory actions targeting cryptocurrency transactions and compliance measures. As previously reported by crypto.news, India's Financial Intelligence Unit directed major crypto exchanges in June to preserve records of over-the-counter cryptocurrency transactions exceeding $10,000 from January 2026 onward. Earlier guidance from the FIU had introduced stricter customer verification requirements for crypto platforms, including stronger know-your-customer procedures and periodic customer record updates under the country's anti-money laundering framework.
India's tax authorities continue facing significant challenges in cryptocurrency tax enforcement. According to Reuters reports, fewer than one-quarter of the 645,000 individuals who carried out cryptocurrency transactions during the financial year ending March 2023 disclosed those transactions in their income tax returns. Officials cited offshore exchanges, private wallets, and peer-to-peer transactions as factors that make it harder to identify beneficial owners and recover taxes. The Reserve Bank of India has maintained its recommendation that cryptocurrencies and privately issued stablecoins should remain outside the regulated financial system, while India currently imposes a 30% tax on cryptocurrency gains.
