India is preparing to join a new phase of international cooperation on cryptocurrency oversight, committing to the automatic exchange of cross-border crypto transaction data from April 1, 2027. The decision reflects growing concern within the government that a significant portion of crypto trading by Indian users takes place on overseas platforms, often beyond the effective reach of domestic regulators.
The data-sharing initiative will operate under the Crypto-Asset Reporting Framework, or CARF, a global standard being developed under the aegis of the Organisation for Economic Co-operation and Development. Modeled on existing systems that allow tax authorities to share information on bank accounts and financial assets, CARF is designed to bring cryptocurrencies into the same transparency regime.
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Officials told The Economic Times that preparatory work is already underway, including the finalisation of technical standards that will determine how data is collected, formatted and exchanged between jurisdictions.
Why Cross-Border Data Matters
For Indian authorities, the emphasis on cross-border reporting addresses a long-standing challenge. Crypto trading is inherently global, and officials have repeatedly pointed out that many Indian investors use foreign exchanges that are not physically present in the country. This has complicated efforts to track transactions, assess tax liabilities and curb illicit financial flows.
By participating in CARF, India expects to gain visibility into transactions conducted by its residents on overseas platforms, while also sharing information with partner countries about foreign users trading through Indian intermediaries. Officials involved in the process say such coordination is essential if crypto assets are to be regulated effectively.
The move also aligns India with broader international standards advocated by the Financial Action Task Force, which has urged countries to strengthen cooperation on monitoring digital assets to reduce risks related to money laundering and tax evasion.
Penalties and Compliance Pressure
Even before the data exchange begins, the government is tightening the compliance framework for crypto platforms operating in India. The Union Budget for 2026 has proposed a new set of penalties aimed at enforcing reporting discipline.
From April 1, 2026, entities that fail to submit required statements on crypto transactions will face a daily penalty of ₹200. In cases of incorrect reporting or failure to rectify errors, a flat penalty of ₹50,000 will apply. Announcing the measures, Finance Minister Nirmala Sitharaman said they were intended to strengthen compliance under the Income-tax Act, 2025, and discourage incomplete or inaccurate disclosures related to crypto assets.
These penalties come on top of an already stringent tax regime introduced in 2022, which imposed a 30 per cent tax on crypto gains and a 1 per cent tax deducted at source on transactions. Together, they signal a shift from viewing crypto primarily as a speculative asset to treating it as a regulated financial activity subject to routine scrutiny.
Industry Adjustments and the Road Ahead
Crypto exchanges and intermediaries are now preparing for higher compliance costs and more intensive reporting obligations. Industry participants say the combination of global data sharing, domestic penalties and existing taxes will require significant investment in systems, staffing and coordination with tax authorities.
Government officials, for their part, say they plan to engage with exchanges to address technical and operational challenges as India transitions into the CARF regime. The expectation, they argue, is not to stifle innovation but to ensure that digital assets operate within a transparent and accountable framework.
As the April 2027 deadline approaches, India’s participation in CARF marks a decisive step in integrating cryptocurrencies into the global financial reporting system — a development likely to reshape how digital asset activity is monitored, taxed and regulated in the years ahead.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
