The Central Board of Direct Taxes (CBDT) has expanded the reporting framework to cover crypto assets and digital currency accounts which will take effect retrospectively from January 1, 2026.
The amendments primarily modify Rule 114C and Rule 114F to incorporate emerging financial instruments such as crypto-assets, central bank digital currencies (CBDCs), and specified electronic money products into the financial account reporting framework.
Inclusion of Crypto Assets in Reporting Framework
A key feature of the amendment is the formal recognition of “relevant crypto-assets” within the financial reporting architecture. The rules introduce a definition of relevant crypto-assets as any crypto asset other than central bank digital currency or specified electronic money products, unless the reporting crypto-asset service provider determines that such assets cannot be used for payment or investment purposes.
By bringing crypto-assets under the reporting framework, the government aims to align domestic reporting standards with emerging international tax transparency norms. Financial institutions and service providers involved in crypto-asset transactions will now be required to report certain transactions and holdings to the tax authorities.
Recognition of Central Bank Digital Currency (CBDC)
The amendments also introduce a statutory definition of Central Bank Digital Currency (CBDC), describing it as any digital form of legal tender issued by a central bank. Accounts holding CBDC for customers are now treated similarly to deposit accounts for reporting purposes in certain situations.
Entities that hold CBDC on behalf of customers may fall within the definition of reporting financial institutions depending on their activities and structure.
Expansion of Depository Account Definition
The rules expand the definition of “depository account” to include accounts that represent electronic money products or accounts holding CBDC on behalf of customers. This move reflects the increasing use of digital financial instruments and aims to ensure that such accounts are not excluded from financial information reporting mechanisms.
The amendment clarifies that certain digital products representing monetary value issued upon receipt of funds and redeemable at par may qualify as specified electronic money products under the rules.
Reporting Requirements for Financial Institutions
Reporting financial institutions are now required to maintain and report additional information relating to account holders.
There are four new requirements.
Firstly, confirmation of whether valid self-certification has been obtained from account holders.
Secondly, reporting whether an account is a joint account, along with the number of joint account holders.
Thirdly, identification of the role through which a reportable person exercises control over an entity.
Lastly, disclosure of whether an account is a new or pre-existing account and its account type.
The rules also expand the scope of financial assets to include interests in relevant crypto-assets, including derivatives or contracts such as futures and options linked to such assets.
Special Provisions for Certain Accounts
The amendments introduce additional provisions related to specific categories of accounts. For instance, accounts established exclusively for company incorporation or capital increase may qualify for special treatment if they satisfy conditions such as temporary fund holding and closure or conversion after incorporation.
Additionally, certain low-value accounts representing electronic money products may be excluded from reporting if the rolling 90-day average balance does not exceed USD 10,000.
Definition of Qualified Non-Profit Entity
Another notable addition is the introduction of a definition for “qualified non-profit entity.” Such entities must be established exclusively for religious, charitable, scientific, cultural, educational, or similar purposes; Be exempt from income tax in India; Have no shareholders or members with proprietary interests in their income or assets; Transfer remaining assets to government or similar qualifying entities upon dissolution.
This definition is intended to clarify which non-profit organizations may be excluded from certain reporting requirements.
Notification Details
Notification No. 19/2026
Date: 5th March, 2026
Read More: JURISHOUR | TAX LAW DAILY BULLETIN : MARCH 5, 2026
