Who Must Report Under India’s CARF Framework?

Under the new framework, a business that facilitates crypto-to-fiat or crypto-to-crypto transactions for customers may be classified as a Reporting Crypto-Asset Service Provider, or RCASP. This category can cover centralised crypto exchanges, brokers, market makers and certain crypto ATM operators.

A platform may fall within the framework when it conducts exchange transactions for customers or makes a trading platform available through which qualifying transactions are completed. The reporting rules apply to relevant calendar years beginning on or after January 1, 2026.

Information for the 2026 calendar year must be submitted through Form 167 by May 31, 2027. Even when a platform identifies no reportable users or controlling persons, it may still be required to submit a nil statement. This means the framework does not operate only when a large or suspicious transaction is detected.

Reporting entities must establish systems capable of continuously classifying customers, reviewing tax-residency information and determining whether transactions fall within the reporting perimeter. Some businesses may simultaneously qualify as Reporting Financial Institutions under CRS or FATCA and as RCASPs under CARF. A crypto platform holding assets on behalf of customers, for example, may operate a custodial account while also offering crypto trading.

In such cases, Form 166 may apply to financial-account information under CRS and FATCA, while Form 167 covers reportable crypto transactions under CARF. Gross proceeds already disclosed through Form 167 generally do not have to be reported again through Form 166, although account balances, income and controlling-person information may remain reportable.

The new obligations arrive as Indian exchanges are already operating under an increasingly compliance-heavy environment. EtherWorld’s review of the top Indian crypto exchanges highlighted how KYC, FIU registration, transaction monitoring and tax reporting have become central features of platform operations.

What Information Will Crypto Platforms Collect?

Reporting platforms will have to conduct due diligence on individual customers, entities and, where applicable, the controlling persons behind those entities. Users may be asked to provide or confirm their full name, address, tax residence, date of birth and Tax Identification Number.

Platforms must assess whether a customer’s self-certification is reasonable when compared with information collected through existing KYC and anti-money-laundering procedures. Transactions must generally be valued and reported in Indian rupees.

Platforms will therefore need reliable valuation processes capable of converting activity across multiple crypto assets and trading pairs into a common reporting currency. Information must also be aggregated according to the customer, transaction category and type of crypto asset.

Rather than receiving only a year-end account balance, tax authorities may obtain a structured summary showing how a user acquired, disposed of, exchanged or transferred particular assets. External wallets are especially significant. Exchanges must collect and retain wallet addresses connected with relevant transfers for at least seven years, although those addresses are generally not required to be included in the standard annual report itself.

This creates a potential bridge between a verified exchange identity and subsequent onchain activity. A withdrawal to a self-custodial wallet does not automatically make all later activity reportable by the exchange, but the original transfer can remain connected with a verified user in the platform’s records. The Ministry of Finance has increased crypto-enforcement and blockchain-forensics training covering wallet attribution, cross-chain tracking and transaction-graph analysis.

Authorities have also intensified scrutiny of VDA-based cross-border transactions. Recent ED searches involving Bengaluru crypto firms illustrate how crypto transfers may attract attention under FEMA and anti-money-laundering laws when they are allegedly used to move funds internationally without authorised channels.

What CARF Means for Indian Crypto Investors

Individual investors will not normally file Form 167 themselves. The primary filing responsibility falls on the reporting exchange, broker, custodian or other covered service provider. Users will nevertheless experience the framework through more detailed onboarding, requests for tax-residency declarations, renewed KYC checks and closer reconciliation between exchange activity and income-tax returns.

The most important practical consequence is that inaccurate or incomplete tax reporting may become easier to detect. Authorities can compare information submitted by exchanges with the VDA income and transactions declared by taxpayers.

This is not merely theoretical. India has already sent 44,057 notices to crypto traders over reporting mismatches, according to government disclosures examined by EtherWorld in its report on India’s intensified crypto oversight. The same disclosure showed action against exchanges for alleged TDS non-compliance and rising collections under the 1% mechanism.

CARF can make such reconciliation broader and more consistent. Investors should therefore retain complete records covering acquisitions, sales, swaps, transfers, transaction fees and wallet movements. Crypto-to-crypto exchanges should not be ignored simply because no rupees entered a bank account.

Users of offshore platforms should also avoid assuming that foreign accounts will remain invisible. CARF is designed to enable participating jurisdictions to automatically exchange crypto-asset information. Once the necessary exchange relationships become operational, information collected abroad could be shared with the jurisdiction where a user is tax resident.

This international dimension is particularly relevant as global platforms rebuild services for Indian customers. Coinbase has introduced BTC-INR trading support, while policy questions surrounding offshore platforms resurfaced during the Binance India withdrawal debate. The guidance does not change the underlying tax burden. India’s Budget 2026 provided no crypto tax relief, leaving the 30% tax structure and 1% TDS framework substantially intact.

Reporting Expands, but Regulatory Gaps Remain

The country continues to govern different parts of the sector through separate legal mechanisms. Income-tax law covers VDA taxation and reporting. The Prevention of Money Laundering Act creates AML obligations for service providers. FEMA may apply to cross-border payments and asset movements. Consumer protection, custody, token listing, market manipulation and exchange-failure rules remain less clearly defined.

EtherWorld’s analysis of the Monsoon Session and India’s crypto regulation prospects found that taxation and AML supervision still leave major gaps involving exchange governance, custody, disclosures, grievance redressal and investor compensation.

Policymakers have meanwhile been studying global crypto-regulation models as they consider how India should balance financial stability, capital controls, innovation and investor protection. It enables authorities to obtain more consistent information about who is transacting, which assets are involved, how much value is being transferred and whether offshore activity corresponds with domestic tax declarations.

For exchanges, implementation will require major changes to compliance infrastructure. Platforms must classify users, validate self-certifications, identify reportable assets, calculate INR values, aggregate transaction categories, retain wallet records and prepare Form 167 submissions.

India has not introduced a new crypto tax through CARF, nor has it legalised cryptocurrency as money or created a full investor-protection regime. The first major test will arrive on May 31, 2027, when reporting service providers submit information covering the 2026 calendar year.

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