Crypto-asset service providers and certain financial institutions may now be required to report transactions and holdings involving such assets to tax authorities.

The Income Tax Department has expanded the financial account reporting framework to include crypto-assets, central bank digital currencies (CBDCs) and certain electronic money product. This has been made effective from January 1.

Experts say that such a move aims to ensure that cross-border tax transparency keeps pace with the rapidly evolving digital financial landscape.

According to a March 5 notification by the Central Board of Direct Taxes (CBDT), rules have now brought ‘relevant crypto-assets’ within the reporting architecture. This means that crypto-asset service providers and certain financial institutions may now be required to report transactions and holdings involving such assets to tax authorities. “The amendments come in response to global developments led by the OECD, particularly the Crypto-Asset Reporting Framework (CARF) and updates to the CRS (Common Reporting Standard),” said Sandeep Bhalla, Partner at Dhruva Advisors

Also, definition of financial accounts and institutions to include emerging digital financial products will also include specified electronic money products (SEMPs) and central bank digital currencies (CBDCs). All these will result in the widening of scope of entities and assets covered under the Common Reporting Standard (CRS). framework.

Additional reporting

The rules clarified that accounts holding CBDC on behalf of customers may be treated similarly to deposit accounts in specific cases. Additionally, the definition of “depository account” has been expanded to include accounts representing electronic money products or those holding CBDC. Further, the amendments introduce additional reporting requirements for financial institutions, including confirmation of valid self-certification from account holders, disclosure of joint account details, identification of controlling persons in entities, and classification of accounts as new or pre-existing.

Changes in Rule 114G outline the reporting requirements for financial institutions regarding the reportable account, including interest, dividends, and other income. As per the new amendment, the institutions must also report whether the account holder has provided a valid self-certification and whether the account is a joint account, including the number of joint account holders. Changes to Rule 114H clarify due diligence procedures for identifying reportable accounts.

“Accounts that become financial accounts due to the expanded CRS definitions will be treated as new accounts from January 1, 2026, while those existing as on December 31, 2025 will be treated as pre-existing accounts,” Bhalla explained.

Sumit Singhania, Partner, Deloitte India, opined that amendment represents a step forward in India’s tax policy as CBDCs and specified electronic money products have now been integrated into the definition of ‘depository accounts’. The amened rule is set to apply from 1 January 2026 and ensures that digital forms of money will be subject to same transparency and reporting standards hitherto applicable in respect of traditional physical currency.

“The Introduction of the crypto-asset reporting framework (CARF) requires reporting financial institutions to track gross proceeds from “relevant crypto-assets”. Under these rules, interests in crypto-assets—including derivatives like futures or options—are now classified as financial assets for reporting purposes,” he said.

Bhalla concluded by saying that by bringing crypto-assets, electronic money products and CBDCs within the reporting ecosystem, “India aims to ensure that cross-border tax transparency keeps pace with the rapidly evolving digital financial landscape,”

Published on March 6, 2026