The Central Board of Direct Taxes (CBDT) has released a detailed guidance note for Indian crypto platforms and foreign exchanges operating in the country. The note aims to simplify the reporting of taxes and transactions under the Income Tax Rules of 2026. It emphasizes that the responsibility for compliance primarily lies with Reporting Crypto-Asset Service Providers (RCASPs) rather than individual investors.
The guidance note outlines the reporting mechanisms for entities engaging in transactions across different jurisdictions, as mandated by the Union Budget introduced in February 2026. It clarifies the reporting obligations of Reporting Financial Institutions (RFIs) as per the relevant Rules notified by the Government of India.
According to the guidelines, crypto service providers should not consider a ‘crypto asset user’ as an individual user if it benefits or acts on behalf of another individual or entity in various capacities. Instead, the individual or entity on whose behalf the relationship exists should be treated as the Crypto-Asset User for identification purposes.
The note specifies that when a crypto service provider transfers payments exceeding $50,000 in crypto assets from a customer to a merchant and acts as an agent for the customer, it should report such transfers as ‘Reportable Retail Payment Transactions’. In cases where the service provider acts as an agent of the merchant, the transfer will be reported accordingly, with the customer of the merchant identified as the “crypto asset user” for taxation reporting.
In situations involving multiple jurisdictions with a nexus, the note advises considering the jurisdiction with the strongest link as the primary jurisdiction for reporting purposes. Additionally, the guidance note includes a set of FAQs to simplify and clarify the law for better understanding.
