- Current Regulation of Cryptocurrencies in India
- Readiness for Global Crypto-Asset Reporting
- Combating Offshore Accounts and Schemes
- Outlook for Cryptocurrency in India
India is entering a new phase of stricter oversight in the crypto sector. The country is steadily moving toward more rigorous regulation of digital assets and increased scrutiny of offshore accounts, reflecting global trends aimed at improving tax transparency and combating tax evasion. In 2025, India continues to refine its legal framework and reporting mechanisms, aligning with international standards, particularly those of the OECD.
Current Regulation of Cryptocurrencies in India
The Indian government officially classifies cryptocurrencies as digital assets rather than currency. This designation defines how they are taxed and regulated. Since 2022, crypto gains have been subject to a flat 30% tax rate, along with a 1% Tax Deducted at Source (TDS) on transactions above certain thresholds. As of 2025, reporting requirements have become stricter: taxpayers are required to provide detailed reports on every cryptocurrency transaction, and major exchanges are mandated to share user transaction data with tax authorities. This level of oversight has become a crucial tool for combating tax evasion and promoting transparency in the digital asset market.
Non-compliance comes with heavy penalties. Unreported crypto income may be taxed at up to 60%, and failing to provide accurate information can result in fines of up to 200% of the tax owed, as well as potential criminal liability of up to seven years in prison. These measures send a clear message: India intends to keep the crypto sector under strict supervision and eliminate money laundering through digital assets.
Readiness for Global Crypto-Asset Reporting
India is preparing to adopt the OECD’s Crypto-Asset Reporting Framework (CARF) starting April 1, 2027. This will extend oversight beyond domestic activity to include the offshore crypto holdings of Indian residents. Under CARF, regulations will apply to exchanges, transfers, NFTs, and stablecoins—significantly enhancing the fight against offshore tax evasion.
Crypto tax software provider Koinx described CARF as a game-changer, posting on X (formerly Twitter) on September 2:
“CARF = Global Crypto Surveillance. Your overseas accounts, wallets, and offshore trades won’t go unnoticed—they’ll be automatically reported back to India through international data-sharing agreements.”
India is expected to sign the Multilateral Competent Authority Agreement (MCAA) next year. This is the same global system that already exposes hidden offshore bank accounts—only now it will extend to crypto.
The numbers underscore why regulation matters: by 2025, India’s crypto user base is projected to exceed 107 million, with transaction volumes possibly reaching $172 billion. Stricter reporting is designed to ensure these vast sums are captured within the tax system rather than slipping into the shadows.
Once implemented, CARF will allow regulators to access offshore balances and historical transactions through cooperation with other jurisdictions.
For investors, the implications are significant. According to Koinx:
Any coin held abroad will be flagged. Offshore CEX transactions will be reported. Wallet balances outside India will no longer remain hidden.
Combating Offshore Accounts and Schemes
India has been actively cracking down on offshore tax evasion through both legislative and enforcement measures. While not an offshore jurisdiction itself, India’s tax and legal framework already prohibits anonymity of beneficial owners and requires transparent reporting. Special attention is given to economic zones offering tax incentives—ensuring they support legitimate economic activity, not shell companies designed for tax avoidance.
Crypto has been at the center of major enforcement operations. Law enforcement agencies have uncovered large-scale money laundering schemes involving offshore platforms, drop accounts, and cryptocurrencies. For instance, a sweeping action against the offshore platform Parimatch revealed that crypto was being used to launder hundreds of millions of dollars, leading to frozen assets and account seizures. These schemes often involved complex transfers via hawala networks, drop accounts, and unlicensed payment companies—prompting India to step up monitoring and launch further investigations.
On the international front, India is working closely with the U.S. and other jurisdictions to exchange tax data and crack down on offshore tax evasion—strengthening global oversight of financial flows and enhancing the fight against shadowy schemes.
Outlook for Cryptocurrency in India
India’s parliament increasingly favors a “regulate, not ban” approach to cryptocurrency. This creates space for blockchain innovation while keeping systemic risks under control. However, implementing global reporting standards and tackling evasion requires coordination across agencies and upgraded monitoring infrastructure.
In practice, despite strong legislation, challenges remain—particularly with unlicensed operators and illicit schemes. Addressing these issues will require tighter monitoring, better-trained tax and enforcement officials, and stronger partnerships with global regulators.
