New amendment to the Income-tax Rules
The Central Board of Direct Taxes (“CBDT”), vide Income Tax Notification dated 5 March 2026, has introduced amendments to the Income-tax Rules, 1962, particularly Rules 114F, 114G and 114H, which govern the reporting of financial accounts under section 285BA of the Income-tax Act, 1961 (hereinafter referred to as ‘the IT Rules’) in line with the Common Reporting Standard (CRS) framework for exchange of financial account information. These amendments are effective from 1 January 2026.
The amendments mainly seek to expand the scope of reportable financial accounts and align the Indian reporting framework with emerging international standards relating to digital assets and crypto-assets.
1. Key changes under the new amendment of rules.
- Expansion of the definition of financial assets to include crypto-assets
The amendments to Rule 114F(2) provide that, for accounts other than U.S. reportable accounts, the term “financial asset” shall also include any interest in a relevant crypto-asset, including derivatives such as futures, forward contracts or options linked to such crypto-assets.
Further, a new definition of “relevant crypto-asset” has been introduced under Rule 114F(5A), which broadly covers crypto-assets that are not central bank digital currencies or specified electronic money products or for which the reporting crypto-asset service provider has adequately determined that it cannot be used for payment or investment purposes.
- Introduction of definitions of CBDC and Specified Electronic Money Product
The amendments introduce new definitions in Rule 114F(1) and related explanations, including the definition of “Central Bank Digital Currency (CBDC)”, which refers to any digital fiat currency issued by a central bank.
Further, Rule 114F(9A) introduces the concept of a “specified electronic money product,” mainly referred to as a digital representation of fiat currency issued upon receipt of funds and redeemable at par value, which may be used for payment transactions.
Correspondingly, the definition of “depository account” under Rule 114F(1) has been expanded to include accounts representing such electronic money products or accounts holding CBDCs on behalf of customers.
- Exclusion for certain low-value electronic money accounts
A new provision inserted under Rule 114F(1)(h)(viii) provides that certain depository accounts representing electronic money products will not be treated as reportable accounts where the rolling ninety-day average aggregate account balance does not exceed USD 10,000 during the reporting period.
- Exclusion of certain capital contribution accounts
The amendments introduce an additional category of excluded accounts under Rule 114F(1)(h)(viii) for accounts opened exclusively for the purpose of company incorporation or capital increase, subject to specified conditions such as blocking of funds until confirmation of incorporation and closure or conversion of the account thereafter.
- Additional reporting obligations for financial institutions
The amendments to Rule 114G(1) require reporting financial institutions to maintain and report additional information in relation to reportable accounts, including:
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- Whether a valid self-certification has been obtained from the account holder;
- Whether the account is a joint account, including the number of joint account holders;
- The type of account, including whether it is a new or pre-existing account; and
- In the case of entity accounts, the role through which a person qualifies as a controlling person.
Further, Rule 114G(1)(e)(ii) has been amended to clarify that reporting must include gross proceeds from the sale or redemption of financial assets where the reporting financial institution acts as a custodian, broker or nominee.
- Avoidance of duplication with crypto reporting frameworks
A new Rule 114G(6A) provides that gross proceeds from the sale or redemption of financial assets need not be reported under the CRS framework to the extent such information is already reported under the Crypto-Asset Reporting Framework (CARF).
- Reporting of equity interest holders in investment entities
The amendment also introduces Rule 114G(1)(fa), which requires financial institutions to report the role through which a reportable person holds an equity interest in an investment entity that is structured as a legal arrangement (for example, certain trusts or similar structures). This provision enhances transparency regarding ownership interests in investment vehicles.
- Collection of additional identification details for existing accounts
In accordance with the amended Rule 114G(4), reporting financial institutions are required to obtain the taxpayer identification number (TIN) and date of birth when updating information relating to pre-existing accounts in accordance with the rules framed under the Prevention of Money Laundering Act, 2002 (PMLA).
- Amendments to due diligence procedures
Changes have also been introduced under Rule 114H, which prescribes due diligence procedures for identifying reportable accounts.
Rule 114H(7)(aa) provides that in exceptional circumstances where a reporting financial institution is unable to obtain self-certification for a new account in time, the institution may apply the due diligence procedures applicable to pre-existing accounts until such self-certification is obtained and validated.
Further, Rule 114H(2) has been amended to clarify the relevant dates for identifying reportable accounts as follows:
| Provision | Category of Account | Relevant Date under Rules | Explanation |
| New Accounts | |||
| Rule 114H(2)(d)(ii) | Other than US reportable accounts (existing CRS framework) | 1 January 2016 | Accounts treated as financial accounts under the existing CRS framework continue to be identified from this date. |
| Rule 114H(2)(d)(ii) (as amended) | Accounts treated as financial accounts solely due to CRS amendments | On or after 1 January 2026 | Accounts that become financial accounts only due to the amendments to the CRS framework will be considered financial accounts from this date. |
| Pre-Existing Account | |||
| Rule 114H(2)(h)(II) | Other than US reportable accounts (existing CRS framework) | 31 December 2015 | This remains the reference date for identifying pre-existing accounts under the earlier CRS framework. |
| Rule 114H(2)(h)(II) (as amended) | Accounts treated as financial accounts solely due to CRS amendments | 31 December 2025 | Where accounts qualify as financial accounts only because of the CRS amendments, this date will be used as the reference date for identifying such pre-existing accounts. |
2. The new reporting obligations for banks and financial institutions:
Banks and financial institutions will now be required to collect and report more detailed information on account holders and controlling persons. In particular, financial institutions are now required to report additional information in relation to reportable accounts, including the status of self-certification, details of joint accounts and number of account holders, the classification of accounts as new or pre-existing, and the role through which an individual qualifies as a controlling person in the case of entity accounts.
The amendments also require reporting of gross proceeds from the sale or redemption of financial assets where the institution acts as a custodian, broker or agent, and mandate the collection of additional identification details such as taxpayer identification number (TIN) and date of birth when updating pre-existing account information in accordance with PMLA requirements. Further, the rules provide that reporting of crypto-asset transactions under the CRS framework may be dispensed with where such transactions are already reported under the Crypto-Asset Reporting Framework (CARF).
3. Impact on individuals:
Although the amendments introduced through the Income-tax (Amendment) Rules, 2026 primarily impose reporting and due diligence obligations on banks and other reporting financial institutions, they may indirectly affect individuals. In particular, individuals may be required to provide additional information to financial institutions, such as self-certification of tax residency, taxpayer identification number (TIN), and other identification details, in order to facilitate compliance with the reporting requirements under section 285BA of the IT Act 1961 and Rules 114F to 114H of the Income-tax Rules, 1962.
Further, the expansion of the reporting framework to include crypto-assets, electronic money products and certain digital asset holdings may result in increased reporting of such financial information by institutions to tax authorities. The amendments also enhance transparency with respect to joint accounts and controlling persons of entities, which may lead to greater visibility of individuals’ financial interests and transactions under the Common Reporting Standard (CRS) framework. Accordingly, while individuals are not directly subject to the reporting obligations, the strengthened reporting and due diligence requirements imposed on financial institutions may indirectly lead to greater disclosure, transparency and tax oversight in relation to individuals’ financial accounts and digital asset holdings.
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