India will commence the automatic exchange of information on cross-border cryptocurrency transactions with other nations starting April 1, 2027, under the international Crypto-Asset Reporting Framework (CARF). The framework, developed by the Organisation for Economic Co-operation and Development (OECD), is designed to help tax authorities globally track digital asset flows and combat tax evasion.
Officials confirmed that technical details for the data exchange are being finalized and should be available within the coming months. The system will function similarly to existing mechanisms for banking information, aiming to enhance global coordination on tax enforcement. A key driver for India's adoption is the prevalence of trading by Indian users on offshore platforms, which has historically made oversight difficult. CARF will provide Indian authorities with automatic updates on this overseas activity.
To prepare for the international system, India is implementing strict domestic penalties effective April 1, 2026. As outlined in the Union Budget 2026, crypto platforms and intermediaries that fail to submit required transaction reports will face a daily penalty of ₹200. A flat penalty of ₹50,000 will be levied for incorrect filings or failure to correct errors. Finance Minister Nirmala Sitharaman stated these measures aim to strengthen compliance with the Income-tax Act.
The technical preparation involves adopting the CARF XML Schema, a standardized format that mandates Reporting Crypto-Asset Service Providers (RCASPs) to collect detailed user information. This includes full names, addresses, tax identification numbers, and details of transfers to unhosted wallets. By aligning its systems, India will join nearly 50 other nations in the framework, including major financial hubs like the UK, France, and Singapore.
Further bolstering the framework, India's Financial Intelligence Unit (FIU-IND) revised its Anti-Money Laundering standards in January 2026. The new rules require platforms to perform liveness detection (live video selfies) during user onboarding and to record geolocation data and IP addresses with timestamps for every new account. These steps aim to combat the use of VPNs and false identities, ensuring the data shared internationally from 2027 is robust and verified.
This regulatory push adds to India's existing crypto tax regime, introduced in 2022, which includes a 30% tax on profits and a 1% Tax Deducted at Source (TDS). The overall move aligns with guidance from the Financial Action Task Force (FATF) and represents a significant step toward integrating cryptocurrency into the formal global financial oversight system.
