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Sources last verified: 20 October 2026
Official sources cited at the end of this page.
On 1 April 2026 India wrote the OECD’s Crypto-Asset Reporting Framework into its own tax law. Section 509 of the Income-tax Act, 2025 and rules 241 to 244 of the Income-tax Rules, 2026 require crypto exchanges, brokers and trading platforms with a nexus in India to collect self-certifications and to report, for every calendar year from 2026, on users resident for tax outside India and on entity users, other than excluded persons and active entities, with a controlling person resident outside India, in Form No. 167 by 31 May of the following year. Is that CARF in India? Domestically, yes. Internationally, not yet: on the OECD’s list of 14 September 2026, India has not committed to CARF exchanges, though it expects to in due course.
The rules move the work to sign-up. A self-certification that fails the reasonableness test must be replaced, or explained and documented, before the platform provides services effecting relevant transactions for that user (rule 244(13)(a)(iii) for individuals, (13)(b)(iv) for entities). Individual users already on the books at 31 December 2025 must be covered within twelve months from 1 January 2026; for entities, see section 05.
A late statement can cost INR 200 a day, and a due diligence failure INR 50,000, under section 446 of the Act.
There are two ways to meet section 509. The first collects declarations at onboarding, then chases, re-tests and remediates before the 31 May statement. The second completes and tests the self-certification while the user is still signing up, so Form No. 167 is built from data that was clean on Day 1. One finds the gap in May; the other closes it before the first trade.
The Central Board of Direct Taxes (CBDT) explained the regime in a Guidance Note released on 24 July 2026.
01 · India CARF at a Glance
| Point | Position as at 20 October 2026 |
| Who reports | Reporting crypto-asset service providers: anyone who, as a business, effects exchange transactions for customers as counterparty, intermediary or trading platform (rule 241(13)) |
| Nexus | Tax residence, incorporation, legal personality or return filing, management or a regular place of business in India; also transactions through an Indian branch (rule 242(1), (2)) |
| Legal basis | Income-tax Act, 2025, section 509; Income-tax Rules, 2026, rules 241 to 244 (from 1 April 2026) |
| Reportable users | Users resident for tax outside India, other than excluded persons; entity users that are not excluded persons or active entities are also reported where a controlling person is resident outside India (rules 241(15), (16)(g), 243(1), 244(3)(b), (4)) |
| First reporting period | Calendar year 2026; Form No. 167 by 31 May 2027 (rule 243(1), (7)) |
| Due diligence from | Onboarding; pre-existing individual users within twelve months from 1 January 2026 (rule 244(2)(a)); entities: section 05 |
| Filing | Online to the Director or Joint Director of Income-tax (Intelligence and Criminal Investigation) under a digital signature; signed by the designated director (or, for a non-resident provider, a power-of-attorney holder from that director); nil statement if none (rule 243(6), (9), (11)) |
| Valuation | Indian rupees (INR), net of transaction fees, converted at the time of each transaction (rule 243(8)) |
| TIN rule | Collected for each foreign residence unless the country issues none or does not require it (rules 243(2), 244(10)) |
| Penalties | INR 200 a day late; INR 50,000 for an uncorrected inaccuracy or a due diligence failure (section 446) |
| Retention | At least seven tax years after the end of the period for furnishing the statement (rule 244(12)); external wallet addresses at least seven years (rule 243(8)(d)) |
| Exchange | Not committed to CARF (OECD, 14 September 2026); not a CARF MCAA signatory (March 2026); partner jurisdictions by notification (rule 241(7)) |
Our regulatory compliance engine clears each crypto user for India’s section 509 reporting on Day 1. It takes the self-certification at sign-up, with controlling persons where rule 244 asks, runs the TIN and reasonableness checks, resolves indicia automatically instead of by your team, and prepares the validated Form No. 167 statement, with zero remediation, as section 07 shows.
02 · India’s Existing Crypto Taxation Landscape
Taxation of VDAs
The Income Tax Department states that income from transferring a virtual digital asset is taxed at a flat 30% plus surcharge and cess, computed with no deduction other than the cost of acquisition.
Transaction Reporting and TDS
A person paying a resident for the transfer of a virtual digital asset deducts tax at 1% under section 393(1) (Table, serial 8(vi)), subject to the thresholds of INR 50,000 and INR 10,000 in section 393(4) (serial 12). Section 509 adds a separate statement about users resident abroad, and about entity users (other than excluded persons and active entities) with a controlling person resident abroad.
03 · Decoding CARF: The OECD’s Framework for Cross-Border Crypto Oversight
CARF is the OECD’s standard for exchanging crypto-asset information between tax authorities, published with the amended Common Reporting Standard in a consolidated text on 8 June 2023. As at 14 September 2026, the OECD lists 77 jurisdictions committed to it. India is one of four relevant jurisdictions listed as not yet committed.
Rule 241 adopts CARF’s vocabulary. A relevant transaction is an exchange transaction or a transfer (rule 241(11)). A relevant crypto-asset excludes central bank digital currencies, specified e-money products and crypto-assets the provider has adequately determined cannot be used for payment or investment (rule 241(9); CBDT Guidance Note, para 2.8). Central bank digital currencies and specified e-money products are covered instead by the amended CRS, discussed in our India CRS 2.0 article and handled by our CRS 2.0 compliance software.
04 · Entities Obligated to Report Under CARF
| Question | What it means for you (rules 241, 242) |
| An Indian crypto exchange or broker effecting crypto-fiat or crypto-crypto trades? | A reporting crypto-asset service provider with an Indian nexus. |
| A foreign platform with a branch in India? | Reports in India for transactions effected through that branch (rule 242(2)). |
| A foreign platform reporting at home? | Relieved of an Indian nexus under rule 242(1)(b) to (e) only by completing the requirements in a notified partner jurisdiction or lodging the rule 242(3)(c) notification; Indian-branch transactions stay reportable. |
| A service offered only now and then? | Not “as a business”: a service carried out on an infrequent basis for non-commercial reasons falls outside (rule 241(14)). |
| A payment processor settling merchant sales in crypto? | Reports a merchant’s customer resident abroad for crypto payments for goods or services worth over USD 50,000 (rule 241(12)(b)), where it must verify that customer’s identity under the Prevention of Money Laundering Act, 2002 (rule 241(16)(a)(iii), (b)). |
| Customers resident only in India? | Individuals are not reportable (rule 241(16)(g)). An Indian entity is reported if it is not an excluded person or active entity and has a controlling person resident abroad (rules 243(1)(c), 244(3)(b), (4)). |
05 · Core Compliance Requirements
A self-certification is valid only if signed or positively affirmed, dated no later than receipt, and complete: for an individual, name, residence address, every tax residence, a TIN for each foreign one and date of birth (rule 244(8)). It is tested for reasonableness against the AML and KYC file; one that fails must be replaced, or explained and documented, before services effecting relevant transactions are provided (rule 244(13)(a)(iii), (b)(iv)).
For an entity, the platform establishes residence and, unless the entity is an excluded person or an active entity, identifies its controlling persons and tests whether they are reportable (rule 244(3), (4)). To identify controlling persons it may rely on AML and KYC information collected under procedures consistent with the 2012 FATF Recommendations as updated in June 2019 for virtual asset service providers (rule 244(5)). Excluded persons include listed companies, their related entities, governmental entities and central banks (rule 241(5)).
Users onboarded by 31 December 2025 are pre-existing. Rule 244(2)(a) gives twelve months from 1 January 2026 for individuals; rule 244(3)(i), for entities, reads 1 January 2025 as published, while the CBDT Guidance Note applies the same twelve months from 1 January 2026. Until the CBDT corrects the rule, confirm the entity date with a chartered accountant or advocate.
Ongoing Account-Holder Due Diligence
After a change of circumstances the platform must not rely on the old self-certification (rule 244(2)(b), (7)). For an individual it may keep the prior status for up to 90 days while it obtains a new self-certification or confirms the old one; failing that, it treats the user as resident both where the original form said and where the new facts point (rule 244(13)(a)(xiv), (xv)). A third party may run the work, but the obligations stay with the platform (rule 244(11)).
Reporting Requirements and Compliance
For each relevant crypto-asset, Form No. 167 carries aggregate amounts or fair market values, units and transaction counts for acquisitions and disposals against fiat, exchanges between crypto-assets, retail payments and transfers in and out by type, and the value and units of transfers to wallets not known to belong to a virtual asset service provider or financial institution (rule 243(1)(e)). Wallet addresses are kept for at least seven years but not reported (rule 243(8)(d)).
06 · Deadlines, Penalties and a Worked Example
| Income-tax Act, 2025 | Amount | For |
| Section 446(1) | INR 200 a day | Statement not furnished by 31 May |
| Section 446(2) | INR 50,000 | Inaccuracy not removed within ten days of discovery (section 509(4)), or due diligence not carried out |
| Section 509(3) | Notice | The authority may require a missing statement within at most 30 days |
Take a fictional crypto exchange incorporated in Abu Dhabi that runs a branch in Mumbai. Transactions effected through the branch are reportable in India (rule 242(2)), and rule 242(3) offers no relief for them: its branch relief covers only branches in a partner jurisdiction. If its first Form No. 167 arrives 40 days after 31 May 2027, the penalty can reach 40 × INR 200, or INR 8,000; a due diligence failure can add INR 50,000.
07 · The Importance of TIN Validation, Ongoing Due Diligence, and Advanced Compliance Tools
TIN Verification Made Precise
Rule 244 asks for a TIN for each foreign residence; it does not ask the platform to validate it. Our TIN lookup tool checks numbers in real time against official sources in 130+ countries, and format across 210+.
At year-end, by hand
A by-hand process collects a declaration at sign-up and reviews it before May. The weakness is timing: a failed reasonableness test found in May means re-contacting a user who has been trading for months, and the rule required the fix before services were provided.
At onboarding, from Day 1
TaxDo runs CARF due diligence inside onboarding, in five steps.
Step 1 · Collect the self-certification. Guided and jurisdiction-aware, one question at a time, with a digital signature; controlling persons, where the rules require them, in the same flow.
Step 2 · Validate the identity. Every TIN checked in real time against official sources in 130+ countries, and the business against registries in 120+.
Step 3 · Run forensic due diligence with Verify+. Our Verify+ forensic engine runs 20+ checks on an individual and 30+ tax-native checks across eight areas on an entity, including official TIN lookup in 130+ countries.
Step 4 · Cure the gaps, without the compliance team:
4a · New users. Reasonableness tested and discrepancies resolved in the same session, before the first trade.
4b · Existing users. One click starts a remediation campaign for the cohort, with guided questions through a link in your brand and every answer checked by Verify+. Each case closes with a signed self-certification and an audit-ready certificate.
Step 5 · Report, and keep the evidence. Each transaction classified by reportable type, and schema-validated CARF data in Indian rupees, prepared and validated for your designated director to sign, verify and furnish as Form No. 167, as rule 243 requires.
From Day-1 wallet-holder self-certification to transaction reporting, with zero remediation.
Our CARF compliance software · Solutions for crypto exchanges and CASPs
Where this sits, and what it does not touch
It runs beside your KYC provider and trading engine. The reporting obligation, and the responsibility for what is reported, stays with the provider, whose designated director (or power-of-attorney holder, for a non-resident provider) furnishes the statement under a digital signature. TaxDo runs the due diligence and prepares and validates the report.
08 · Actions by Other Jurisdictions: A Comparative Lens
| Jurisdiction | CARF position |
| United Kingdom | Applies from 1 January 2026; first report by 31 May 2027 (SI 2025/744) |
| European Union | DAC8 has applied since 1 January 2026 |
| Japan | OECD list: first exchanges by 2027 |
| United Arab Emirates | OECD list: first exchanges by 2028 |
| Singapore | From 1 January 2027; first return by 31 May 2028 (S 551/2026) |
| Canada | Proposed from 2027 in Bill C-31, not yet law |
| Argentina | OECD list: first exchanges by 2029 |
India collects from 2026 like the UK and the EU, but without the exchange commitment. An Indian platform with European users meets a second regime: DAC8 has applied in the EU since 1 January 2026, and a provider within its scope reports its EU-resident users under it, which our DAC8 compliance software covers.
09 · Recent Changes and What’s Next
21 August 2025
The Income-tax Act, 2025, carrying section 509, receives assent after Parliament passed it on 12 August.
20 March 2026
The Income-tax Rules, 2026 are notified, rules 241 to 244 among them.
1 April 2026
The new Act and the 2026 Rules take effect; section 446, as substituted by Act No. 4 of 2026, carries the penalties.
24 July 2026
The CBDT releases its Guidance Note on section 509.
31 December 2026
Twelve months from 1 January 2026 end for pre-existing individual users (rule 244(2)(a)), and for entities on the Guidance Note’s reading.
31 May 2027
The first Form No. 167, for calendar year 2026, falls due.
Still awaited
India’s CARF commitment (not listed by the OECD on 14 September 2026), its CARF MCAA signature (absent from the OECD list, status March 2026) and any notification of partner jurisdictions under rule 241(7).
10 · Related Reading
Framework articles: CARF and crypto tax transparency · CRS 2.0 compliance for financial institutions · Self-certification under CRS 2.0, DAC8 and CARF · CRS 2.0 in India
Product: Regulatory compliance engine · Day 1 onboarding validation · Business registry check · CARF compliance software
