India's Crypto Crackdown: Global Rules, Local Enforcement Take Shape

India’s Ministry of Finance is set to convene a critical meeting on Sept 8, 2025, to discuss the taxation and regulatory framework for virtual digital assets (VDAs) [1]. This move aligns with broader global efforts to enhance tax transparency in the crypto sector, with India preparing to implement the Organization for Economic Cooperation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF) by April 1, 2027 [2]. The CARF will require Indian crypto exchanges and service providers to report customer and transaction data to tax authorities, enabling cross-border sharing of information and tightening oversight on offshore holdings [3].

The discussion on Sept 8 is expected to address recent legislative updates, including the Income Tax (No. 2) Bill, 2025, which came into effect on Aug 22, 2025, replacing the Income Tax Act, 1961 [1]. This legislation places a flat 30% tax on gains from VDA transfers, along with a 1% tax deducted at source (TDS) on all transactions exceeding specific thresholds. The Central Board of Direct Taxes (CBDT) has been instrumental in shaping these policies, collaborating with the Financial Intelligence Unit (FIU-IND), the Reserve Bank of India (RBI), and the Securities and Exchange Board of India (SEBI) to ensure compliance and anti-money laundering (AML) standards [1].

India’s commitment to global regulatory alignment has been underscored by its recent adoption of OECD guidelines, joining countries like South Korea in a coordinated effort to monitor offshore crypto activity. A senior official from the Ministry of Finance confirmed that the CARF will require platforms to collect and report detailed transaction data, making it increasingly difficult for residents to conceal crypto earnings held abroad [3]. Crypto tax software provider Koinx highlighted the significance of this development, noting that all accounts, wallets, and offshore trades will be subject to international reporting protocols [3].

The Indian government has also intensified its enforcement efforts, with the Income Tax Department sending notices to individuals who failed to report VDA transactions in previous years [3]. This reflects a broader strategy to ensure compliance, particularly in light of India’s growing role as a global crypto hub. According to the Chainalysis Global Crypto Adoption Index, India ranked first in crypto adoption for the second consecutive year in 2025, with the United States in second place [5]. The report cited robust engagement across centralized and decentralized services, particularly in major markets like India, Vietnam, and Pakistan.

India’s aggressive regulatory and enforcement approach has been bolstered by increased institutional participation in the crypto space. The approval of spot Bitcoin ETFs and clearer regulatory frameworks have drawn traditional financial institutions into the crypto ecosystem [5]. Despite these developments, challenges remain for individual traders, including the lack of clarity in tax rules for decentralized finance (DeFi) and non-fungible tokens (NFTs). Additionally, cross-border transactions involving foreign exchanges and wallets have raised concerns under the Foreign Exchange Management Act, 1999 (FEMA), with potential double taxation and compliance issues [1].

As India continues to refine its regulatory stance, the Sept 8 meeting is expected to play a pivotal role in shaping the future of crypto taxation. The government’s focus on transparency, combined with its alignment with global standards, signals a broader shift toward accountability in the digital asset sector. With India leading the pack in crypto adoption and regulatory progress, the country is positioning itself as a key player in the evolving global crypto landscape.

Source:

[1] Crypto taxes in India, explained: What traders need to know in 2025 (https://cointelegraph.com/explained/crypto-taxes-in-india-explained-what-traders-need-to-know-in-2025)

[2] India Joins OECD: Will Begin Sharing Crypto Transaction (https://finance.yahoo.com/news/india-joins-oecd-begin-sharing-160336522.html)

[3] India to Adopt Global Crypto Tax Reporting Rules by 2027 (https://www.livebitcoinnews.com/india-to-adopt-global-crypto-tax-reporting-rules-by-2027/)

[4] The 2025 Global Adoption Index (https://www.chainalysis.com/blog/2025-global-crypto-adoption-index/)

[5] India Leads Global Crypto Adoption for Second Year (https://coinmarketcap.com/academy/article/india-leads-global-crypto-adoption-for-second-year)