In late July 2026, the Central Board of Direct Taxes issued guidance on how India will implement the Crypto-Asset Reporting Framework (CARF). From calendar year 2026, crypto exchanges and other reporting crypto-asset service providers must report their users' transactions to the tax department in Form 167, due by 31 May of the following year. They report acquisitions, disposals, crypto-to-crypto trades and transfers, in rupees, and must confirm each user's tax residency.
For you, this creates no new tax and no new filing duty. The 30% tax on VDA gains and the 1% TDS are unchanged. What changes is visibility. The department will have transaction-level data from exchanges, so what you report in your ITR should match what your exchange reports. If you have been leaving crypto out of your return, or reporting only net profit, this is the year to fix that with a CA.
What CBDT issued in July
CARF is a framework designed by the OECD so that tax authorities get standard information about crypto-asset transactions. India implemented it through section 509 of the Income-tax Act, 2025, which took effect on 1 April 2026, together with Rules 241 to 244 of the Income-tax Rules, 2026. CBDT's guidance, reported on 27 July 2026, explains how platforms should comply.
This sits alongside another change that came in on 1 April 2026 through the Finance Act 2025: new section 285BAA, which requires prescribed reporting entities, including exchanges, to furnish information on crypto-asset transactions.
What exchanges report and when
Under the guidance, reporting platforms must:
- Confirm the tax residency of their users.
- Report acquisitions and disposals of crypto-assets.
- Report crypto-to-crypto trades.
- Report transfers, with values in rupees.
- Aggregate and report transfers to unidentified external wallets.
- Keep wallet addresses for at least seven years.
The timing:
- It applies to transactions from calendar year 2026, meaning 1 January 2026 onward.
- Form 167 for 2026 is due by 31 May 2027.
No new tax, no new filing for you
I want to say this clearly because the headlines can make it sound bigger than it is. CARF does not introduce a new tax. It does not add a new form for you to file. And it does not decide whether crypto is legal or not.
The tax rules are exactly what they were:
- Gains from transferring a VDA are taxed at a flat 30% under section 115BBH, plus surcharge and 4% cess. Only the cost of acquisition is deductible.
- Losses cannot be set off against any other income or carried forward.
- 1% TDS applies under section 194S, now section 393 under the Income-tax Act, 2025.
- VDA income goes in Schedule VDA, in ITR-2 or ITR-3.
Why your ITR must now match
Until now, the department could see your crypto activity mainly through TDS entries in Form 26AS and through AIS. That already caught a lot. According to coverage of FIU-IND's 2024-25 annual report, tax authorities identified about ₹888.82 crore of undisclosed VDA income.
CARF adds detail. The department will know not just that you sold, but what you bought, what you swapped, and what you moved to outside wallets. If your Schedule VDA tells a different story, expect questions.
The Finance Act 2025 also brought VDAs into undisclosed income for block assessments, which apply after search and seizure. The direction is clear.
Who this hurts and who it does not
When we launched Unocoin in 2013, I remember about 30 people from the tax department showing up at our office around our third day in business. We had two employees. From that moment, we knew Bitcoin in India would be watched closely, and the only workable answer was to keep records and do KYC properly from the start.
Platforms that have done full KYC and kept proper records for years lose nothing from CARF. They already know who their users are. Users who report honestly lose nothing either. Their returns will match.
The people affected are those who did not report, or who reported only part of what they did. For them, the gap is closing. The answer is not to try to hide activity. It is to get the records together and file properly with a CA.
Clean up your records this year
Because CARF reporting covers 2026 transactions, the time to get organised is now, not in May 2027. Here is the routine I would follow:
- Download statements from every platform you use, today and at the end of each quarter.
- Keep purchase records with dates and rupee costs. Only the cost of acquisition is deductible.
- Record every swap and spend, not only rupee sales. CARF reports crypto-to-crypto trades.
- Log transfers to your own wallets, with transaction IDs. Exchanges report transfers to external wallets, so you want your own record that those coins are still yours.
- Match TDS to 26AS and claim it in your return.
- File in Schedule VDA, every transfer, losses not netted against gains.
- Use a CA. Especially if you have used several platforms or have airdrops, staking rewards or gifts.
What about the current filing season?
For AY 2026-27, the due date for ITR-1 and ITR-2 filers was 31 July 2026. Non-audit ITR-3 and ITR-4 filers have until 31 August 2026. If you sold crypto in FY 2025-26 and have not filed, or filed without your VDA income, talk to your CA now about your options. If you have missed your date, a belated return may still be possible; check the portal and your CA.
A word on scams
Whenever tax news hits the headlines, fake "tax department" messages follow. The department does not ask for your OTP, password or seed phrase. Never share them. Log in to the e-filing portal yourself, never through a link in a message. If you lose money to a scam, call 1930 or file at cybercrime.gov.in as fast as you can.
What "transfers to unidentified external wallets" means for self-custody users
One line in the guidance worries people who hold Bitcoin in their own wallets: exchanges must aggregate and report transfers to unidentified external wallets. Does that mean moving coins to your own wallet is now suspicious?
No. It means the department will know that coins left the exchange. Holding your own keys is a normal and sensible practice. What matters is that you can show those coins are still yours. Keep the transaction IDs of every transfer to your own wallet, note the date and the rupee value, and keep that with your tax records.
The common view among practitioners is that sending coins to a wallet you own is not a sale, because there is no consideration and no change of owner, though that is a view, not a ruling. When you later sell those coins, the sale goes into Schedule VDA like any other. Your CA can confirm how to record it.
The self-custody and tax guide covers what to keep in more detail.
What I am telling friends this week
When friends ask me about this news, my answer is short. Nothing about owning Bitcoin changed. The tax did not change. What changed is that the paperwork now has to be right, because both sides of the record will be visible. If you have been meaning to sort out your records, this is the push.
To file correctly this year, start with the column-by-column Schedule VDA guide, and for the full rules see the tax guide. If you want developments like this explained every week, sign up for the India Bitcoin Brief.
Common questions
What is CARF in India?
The Crypto-Asset Reporting Framework is an OECD standard India implemented through section 509 of the Income-tax Act, 2025 and Rules 241 to 244 of the Income-tax Rules, 2026. Exchanges report users' crypto transactions to the tax department.
Do crypto exchanges share data with the tax department?
Yes. TDS already appears in Form 26AS and AIS, section 285BAA requires reporting entities to furnish crypto transaction information, and under CARF exchanges report 2026 acquisitions, disposals, crypto-to-crypto trades and transfers in Form 167.
Is there a new crypto tax in 2026?
No. CARF creates no new tax and no new filing duty for users. Gains are still taxed at 30% plus surcharge and cess, and TDS is still 1%. Your ITR should match exchange records. Check with a CA.
What is Form 167?
It is the form reporting crypto-asset service providers file under India's CARF rules, due by 31 May of the year after the transactions. For 2026 transactions, that is 31 May 2027.