India Expands FATCA/CRS to Cover Crypto and CBDCs

India tightens international tax reporting to cover crypto, CBDCs and digital money India’s tax authority has widened the scope of its international reporting rules to bring specified crypto-assets, central bank digital currencies (CBDCs) and other digital money products under FATCA and CRS obligations. The Central Board of Direct Taxes (CBDT) updated India’s implementation guidance for the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS), the Economic Times reported, meaning digital financial assets will now be treated alongside traditional financial instruments for cross-border tax reporting. What’s changing - Banks, mutual funds, insurance firms, custodians and other reporting financial institutions will have to identify reportable accounts, verify customers’ tax residency and disclose relevant financial information as part of India’s commitments under the Automatic Exchange of Information (AEOI) framework. - Enhanced due diligence will apply to high-value accounts with balances above $1 million. Reporting entities must perform additional review procedures before classifying these accounts for reporting. - The guidance also updates procedures for validating tax residency and identifying reportable accounts across institutions covered by FATCA and CRS. Why it matters By explicitly including specified crypto-assets, CBDCs and digital money products, the CBDT is folding digital assets more firmly into existing international information-sharing channels. That raises the compliance bar for exchanges, custodians and other digital-asset service providers, and increases the likelihood of cross-border tax data exchange relating to crypto activity. Regulatory backdrop The move follows a string of other measures aimed at tightening crypto oversight in India. In June, the Financial Intelligence Unit (FIU) asked major exchanges to preserve records of over-the-counter (OTC) crypto trades exceeding $10,000 from January 2026, including beneficial ownership, source of funds, transaction purpose and destination wallets, according to prior reporting by crypto.news. The FIU has also tightened KYC and periodic customer-record update requirements under India’s anti‑money‑laundering rules. Tax authorities have flagged enforcement challenges tied to offshore exchanges, private wallets and peer‑to‑peer trades. Reuters reported internal Income Tax Department documents showing concern that such flows hinder tax collection; fewer than one-quarter of the roughly 645,000 people transacting crypto in the year to March 2023 disclosed those transactions on returns, the documents said. Policy context India currently taxes crypto gains at 30% but still lacks a unified, comprehensive law for digital assets. The Reserve Bank of India has recommended keeping cryptocurrencies and privately issued stablecoins outside the regulated financial system, citing financial-stability risks and worries that foreign-currency–backed stablecoins could undermine monetary sovereignty and obscure taxable profits. What to expect Operationally, exchanges, custodians and financial firms will need to update reporting systems, KYC workflows and due-diligence processes to capture and classify covered digital assets. For high-net-worth crypto holders, the $1 million threshold signals increased scrutiny. For regulators and tax authorities, the updated FATCA/CRS guidance provides another tool to trace cross-border crypto flows and recover unpaid taxes. The CBDT’s revision marks a clear step toward integrating digital financial assets into India's international tax-reporting framework, reinforcing a compliance-first approach while broader policy debates about how to regulate crypto continue.