Govt Tightens Tax Net On Crypto Assets, Digital Currency
· Free Press Journal
The central government has expanded the tax net to include crypto assets and digital currency in the financial account reporting framework under the income tax rules.
In a notification dated March 5, the government has made changes to Rules 114F, 114G and 114H of the Income Tax (Amendment) Rules, 2026. The notification was issued by the Central Board of Direct Taxes (CBDT).
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The amendments introduce new definitions and reporting requirements regarding digital financial instruments and certain entities.
Davos 2026 Crypto Surge: How Digital Assets Became A Core Part Of Global Finance DebateThe latest notification by the government is in line with its previous decisions aimed at tightening compliances on crypto holders. In 2022, the Centre had imposed a flat tax of 30 percent on gains from crypto assets.
The latest changes will be effective from January 1, 2026.
With this, the definition of ‘financial assets’ has been expanded to include CBDC (central bank digital currency), interest from crypto assets and various other electronic money products.
The move will lead to more comprehensive reporting of digital assets and tax compliance.
The Income Tax (Amendment) Rules detail the due diligence and reporting obligations under the country’s implementation of the automatic exchange of financial account information regime.
From now on, all crypto asset service providers and financial institutions will be required to report to tax authorities about transactions and holdings, including such assets.
Meesho Gets Rs 1,500 Crore Tax Demand Notice For Assessment Year 2023-24; Company To Contest OrderThe changes have strengthened the reporting obligations of financial institutions as they would now be required to maintain and report additional information, including whether valid self-certification has been provided, whether an account is a joint account and the number of joint account holders, and the role through which a person qualifies as a controlling person of an entity.
Moreover, the definition of ‘depository institutions’ has also been amended. From now on, this will also include accounts which represent electronic money products or central bank digital currencies held for customers.
The notification also clarifies the treatment of accounts related to company formation or capital increase and small electronic money accounts with limited balances.