Indian banks and exchanges must now report crypto and CBDC holdings under FATCA and CRS rules, expanding cross-border tax data sharing and raising compliance costs for the industry.
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India's tax authority has expanded its international reporting framework to cover crypto assets and central bank digital currencies, requiring banks and other financial institutions to report holdings of these digital assets to foreign tax authorities under FATCA and Common Reporting Standard rules.
The Central Board of Direct Taxes revised its implementation guidance for the Foreign Account Tax Compliance Act and the Common Reporting Standard, the Economic Times reported. The update brings specified crypto-assets, CBDCs, and digital money products within the scope of India's Automatic Exchange of Information commitments.
Reporting institutions – banks, mutual funds, custodians, and other investment entities – must now identify reportable accounts that hold these assets, verify customers' tax residency, and transmit the information to foreign jurisdictions. The revised rules also require enhanced due diligence on accounts with balances exceeding $1 million, with additional review procedures before classification.
The move places digital assets on par with traditional financial accounts for automatic information exchange. Indian residents who hold crypto through overseas exchanges or private wallets may now have those holdings reported to Indian tax authorities, increasing the risk of detection for those who did not declare gains.
For exchanges operating in India, compliance costs are rising. The new FATCA and CRS obligations add to existing requirements from the Financial Intelligence Unit. In June, the FIU directed several major crypto exchanges to preserve records of over-the-counter cryptocurrency transactions exceeding $10,000 from January 2026 onward, covering beneficial ownership, source of funds, transaction purpose, and destination wallets. The FIU had also tightened know-your-customer rules for crypto platforms under the country's anti-money laundering framework.
Tax enforcement remains a persistent challenge. Reuters reported that internal government documents showed the Income Tax Department found 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 trades as factors that make it harder to identify beneficial owners and recover taxes.
The new reporting framework could significantly increase detection. With Indian authorities now receiving data on crypto holdings from foreign jurisdictions under FATCA and CRS, investors who used overseas platforms to avoid the 30% tax on crypto gains may face greater scrutiny.
The Reserve Bank of India has maintained its recommendation that cryptocurrencies and privately issued stablecoins should stay outside the regulated financial system, Reuters reported. Internal documents showed the central bank continues to raise concerns about financial stability and monetary sovereignty, warning that wider stablecoin use could make crypto profits harder to detect for tax purposes.
That stance creates regulatory tension. While the tax authority expands reporting obligations, the central bank wants to restrict crypto activity. India has yet to introduce a comprehensive law governing digital assets. The Finance Ministry has said existing tax and other legal measures have helped contain risks associated with virtual digital assets.
The CBDT's revised guidance adds another compliance layer, extending international tax reporting obligations to crypto-related products and placing them more firmly within India's cross-border information-sharing framework. No date has been set for a dedicated crypto law.
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