The government aims to prevent tax evasion and ensure compliance
Central Board of Direct Taxes’ (CBDT) guidance note on reporting obligations for crypto exchanges and other intermediaries highlights the government’s resolve for total visibility on such tradings and transactions, as per experts.While exchanges and crypto platforms described the note as a significant step towards bringing virtual digital asset (VDA) transactions under a more structured tax reporting framework, analysts called it an attempt to curb the illicit transactions in the space.“By requiring platforms to actively track and report cross-border transactions through Form 167, the state is effectively pulling back the curtain on the anonymity that many users thought off-shore or unregulated exchanges still offered,” Rashmi Deshpande, Founder of Fountainhead Legal.Catching tax evasionFor a long time, regulators relied on the friction of the 1 per cent TDS to track local trading. However, this shift to the global CARF standard changes the game entirely. The government isn’t introducing new taxes but building a global net to catch tax evasion and wealth flight before it even happens, said Deshpande.The CBDT guidelines now align India’s reporting standards to that of the Organisation for Economic Co-operation and Development that puts India on a global level-playing field. This puts the onus for transparency on platforms rather than investors, said Sharat Chandra, Founder, EmpowerEdge Ventures.“This is more to plug any tax avoidance and illicit activities that happen in this space. The note will allow more visibility into transactions both illicit and otherwise,” said Chandra.While Chandra noted that the developments also put additional compliance cost on platforms, industry stakeholders appear to welcome the move.“The CBDT’s guidance note provides much-needed operational clarity on how crypto service providers can meet their reporting obligations under the Income Tax Act,” said Vimal Sagar Tiwari, Co-Founder, CoinSwitch.Fostering greater transparencyHe argued that the move ultimately benefits responsible investors, compliant exchanges, and regulators by fostering greater transparency and trust in the ecosystem.“When regulated service providers follow consistent reporting standards, it becomes more difficult to underreport or conceal taxable crypto transactions through compliant platforms,” he said.Further, Edul Patel, CEO, Mudrex, pointed out how the guidance note lays an important foundation for a broader policy framework. As reporting standards become more robust, policymakers will be better positioned to develop balanced regulations that protect investors while enabling innovation. “The industry has long advocated for regulatory clarity, and this marks another meaningful step towards a comprehensive framework for digital assets in India,” said Patel.Published on July 27, 2026
