Central Board of Direct Taxes issues guidance note on crypto tax, transaction reporting

The Central Board of Direct Taxes CBDT has issued a detailed guidance note for Indian crypto platforms and foreign exchanges operating in the country to explain in a simple manner the issues related to reporting taxes and transactions under the provisions of the Income Tax Rules 2026The guidance note reiterates that the primary compliance burden falls on Reporting CryptoAsset Service Providers RCASPs not directly on individual investors It further explains reporting mechanisms for entities transacting across different jurisdictions which have kicked in with the Union Budget introduced in February 2026The Guidance Note is intended to explain the reporting obligations of Reporting Financial Institutions RFIs contained in the relevant Rules notified by the Government of India in a simple manner Given that the Common Reporting Standard CRS is developed jointly by participating jurisdictions including India working with the OECD the Commentary on CRS and other relevant materials have also been cited so as to facilitate their reference by the RFIs where so required according to the CBDT statementThe guidelines further clarify that crypto service providers should not treat a crypto asset user as an individual user if it benefits or accounts for another individual or entity as an agent custodian nominee signatory investment advisor or intermediaryInstead the individual or entity on whose behalf the CryptoAsset User relationship is in place should be treated as the CryptoAsset User and identification should be carried out on that basis the guidance note statesThe note also makes it clear when a crypto service provider transfers payments made in crypto assets from a customer to the merchant for a value greater than USD 50000 and acts as an agent for the customer it should report such transfer as a Reportable Retail Payment TransactionIn the case of the service provider is acting as an agent of the merchant the transfer will be reported as such and not as a retail transaction In this case the customer of the merchant will become the crypto asset user whose transaction will get reported for taxationHowever with respect to such transfers the RCASP is required to also treat the customer of the merchant as the CryptoAsset User and to report the transaction as a Reportable Retail Payment Transaction with respect to the customerIn case there are multiple jurisdictions where a nexus exists that are both partner jurisdictions the jurisdiction with the strongest link should be considered the primary jurisdiction for reporting purposes ie a nexus higher on the list represents a stronger link than a nexus lower on the list the note addedThe guidance note also has a set of FAQs to help make the law simpler and clearerThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever