India is set to enhance its oversight of cryptocurrency transactions by joining the OECD”s Crypto-Asset Reporting Framework (CARF), starting April 2027. This initiative aims to facilitate the sharing of cross-border crypto data, targeting offshore tax evasion and promoting transparency in an often opaque industry.
The journey towards this framework will officially commence with reporting obligations for Indian exchanges beginning on April 1, 2026. During this phase, all crypto exchanges, wallet providers, and intermediaries in India will be required to maintain comprehensive records of every transaction, which will then be submitted to the Income Tax Department.
The CARF operates similarly to traditional financial reporting systems used by banks, allowing countries to automatically exchange information about crypto transactions among tax authorities. As a result, Indian regulators will be equipped to track crypto activities conducted on foreign platforms, a significant step given that a considerable portion of crypto trading by Indian residents occurs outside the country.
In conjunction with these measures, the Union Budget 2026 has introduced penalties for non-compliance, further emphasizing the government”s commitment to enforcing these regulations. Penalties include a daily fine of ₹200 for failing to submit reports and ₹50,000 for incorrect reporting or not rectifying errors. Finance Minister Nirmala Sitharaman has stated that these actions are intended to strengthen compliance under the Income-tax Act, 2025.
This regulatory shift will impact not just the exchanges but also investors. With CARF in place, foreign exchanges will be mandated to report the crypto activities of Indian residents to the Indian authorities. This means that investors will no longer be able to conceal their offshore crypto holdings, as the government will have enhanced visibility into cross-border transactions.
Despite the tightening regulations, interest in cryptocurrency remains robust. According to SEBI Chairperson Tuhin Kanta Pandey, awareness of cryptocurrency is increasing, with more investors recognizing its potential compared to traditional investment vehicles such as corporate bonds. This growing engagement signals that cryptocurrencies are becoming a staple in the investment landscape, and regulatory bodies are gradually adapting to this evolution.
In summary, by April 2027, the landscape of cryptocurrency transactions in India will undergo significant changes, with enhanced scrutiny and transparency becoming the norm. Both investors and exchanges must prepare for a new era of compliance, as the government takes decisive steps to integrate India into the global crypto reporting framework.
