The Central Board of Direct Taxes (CBDT) has issued a ‘guidance note’ on crypto-assets and Central Bank Digital Currencies (CBDCs) that are useful for taxpayers and crypto users.
‘Relevant Crypto-Assets’ such as Bitcoin, Ether and similar tokens are not legal tender in India, the note has stated prominently.
It also clarified that a Central Bank Digital Currency (CBDC), a Specified Electronic Money Product (SEMP), or a crypto-asset that has been determined not to be usable for payment or investment don’t come under relevant crypto assets.
Only the India rupee, issued by the RBI (Reserve Bank of India), is legal tender, which allows a form of money that the law officially recognizes as valid for paying debts, taxes and other financial obligations.
Crypto exchanges may have dual reporting obligations
The relevant for the section is that crypto exchanges, the platform where users buy and sell crypto assets, will be required to file either form 167 or 166.
To prevent duplication, crypto transaction proceeds already reported under Form 167 (Reporting Crypto-Asset Service Provider) do not need to be reported again in Form 166 (Reporting Financial Institution), though other account information must still be reported
Crypto wallets may or may not be reportable
The note has clarified on the confusion regarding a customer’s crypto wallet, adding that if the platform holds customers’ crypto-assets, then it may be treated as a custodial accounts.
If it only provides wallet software and does not hold customer assets, it may fall outside the CRS reporting framework, although it may still have obligations under the Crypto-Asset Reporting Framework (CARF).
CBDCs are treated as fiat currency, not crypto
The guidance makes clears that CBDCs and cryptos are different, with the latter being a digital fiat currency and is treated as Depository Accounts from January 1, 2026.
Institutions holding CBDCs on behalf of customers must conduct due diligence and report eligible accounts in Form 166.
India to implement OECD’s Crypto-Asset Reporting Framework (CARF)
India is going to implement the OECD’s Crypto-Asset Reporting Framework (CARF), beginning cross-border crypto tax data exchanges on April 1, 2027.
This will ensure better exchange of information for those holding crypto assets. From April 01, 2026, the government made domestic reporting obligations and statements for virtual digital asset transactions mandatory.