India Expands International Tax Reporting to Include Crypto and CBDCs

India's Central Board of Direct Taxes has quietly pulled crypto assets and central bank digital currencies into the same international tax reporting net that already governs foreign bank accounts — a regulatory move that closes one of the most exploited compliance loopholes in the subcontinent's digital asset market and puts digital assets on the same footing as traditional reportable financial products.

As reported by The Economic Times, the CBDT has revised India's implementation guidance for the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS). Specified crypto-assets, central bank digital currencies, and digital money products now sit inside the Automatic Exchange of Information (AEOI) framework. Reporting financial institutions — banks, mutual funds, insurance companies, custodians, and other investment entities — must identify reportable accounts, verify customer tax residency, and transmit financial information to foreign jurisdictions under India's existing international commitments. The framework also provides updated procedures for validating tax residency and classifying accounts covered by FATCA and CRS obligations.

The $1 million diligence threshold

The real cost of compliance just went up for high-net-worth crypto holders. The revised guidance introduces enhanced due diligence obligations for accounts exceeding $1 million, requiring additional review procedures before any account is classified for cross-border reporting. For institutions servicing Indian clients with material digital asset exposure, this translates into a new onboarding and re-verification workflow layered on top of existing KYC stacks — and effectively eliminates the "we couldn't classify the product" workarounds that previously kept some crypto positions outside AEOI's reach.

Compliance pressure is compounding

This is not a standalone policy gesture. The CBDT revision arrives weeks after a Financial Intelligence Unit directive ordering major crypto exchanges to preserve records of over-the-counter transactions above $10,000 dating back to January 2026, with the Income Tax Department separately flagging overseas exchange flows and private wallet activity as enforcement blind spots, per Reuters reporting cited by crypto.news. Earlier FIU guidance also tightened customer verification for crypto platforms under the country's anti-money laundering framework. Each measure tightens the perimeter around capital that historically moved through regulatory arbitrage; together, they read as a coordinated institutional response rather than isolated rule-making — and a clear signal that the era of opacity in Indian crypto flows is drawing to a close.

The macro read for institutional desks

For trading firms, custodians, and family offices with Indian client exposure, the operational checklist is concrete: map every digital asset product to the revised FATCA/CRS classification taxonomy, recalibrate onboarding flows for the $1 million diligence tier, and pressure-test reporting pipelines against cross-border exchange timelines. The macro signal is equally direct — Delhi is choosing transparency over capital flight tolerance, and the compliance overhead is now permanently priced into the cost of doing business in the Indian digital asset market. For foreign jurisdictions receiving AEOI data, India's reporting surface has just expanded in ways that will reshape how they assess inbound crypto wealth for years to come.