India is preparing to tighten its grip on digital assets held abroad by its citizens. From April 1, 2027, the government will put into effect the Crypto-Asset Reporting Framework (CARF), a system designed by the Organisation for Economic Co-operation and Development (OECD).
A senior Finance Ministry official said the framework will ensure Indian residents’ offshore cryptocurrency holdings no longer escape the tax net. The official added that legislative changes and system preparations are already underway, and the framework should be ready before 2027.
To operationalize this, India will sign the Multilateral Competent Authority Agreement (MCAA) next year. The MCAA is a global arrangement for the automatic exchange of tax information. India had signed a similar agreement in 2015, but that covered only traditional financial accounts. Cryptocurrencies require a separate pact under CARF.
How the system works
Once CARF is active, Indian authorities will receive regular reports on citizens’ overseas crypto holdings. For example, if an Indian resident trades on a UAE exchange, the platform will pass the details to the United Arab Emirates (UAE) tax office, which will then share them with India.
That means residents will have to declare and pay tax on overseas crypto income in India. Relief will be provided where tax has already been deducted abroad, avoiding double taxation.
Reporting obligations
CARF places obligations on crypto exchanges, wallet providers, brokers, and NFT platforms. They will need to report:
- Crypto-to-fiat transactions
- Trades between cryptocurrencies
- Transfers between wallets or platforms, including unhosted wallets
- Large retail payments above $50,000
The scope also extends to stablecoins, derivatives, and some NFTs.
Why it matters
India is one of the largest markets for digital assets. Industry trackers put transaction volumes at $172 billion, with the user base projected to cross 107 million in 2025.
India hasn’t officially recognised cryptocurrencies yet, but joining the OECD framework makes it clear the government wants tighter checks and global alignment.
Also Read: Indian Govt to Adopt Blockchain for Digital Commerce, Land Records
