The Central Government has notified amendments to the Income-tax Rules, 1962 to strengthen the reporting framework relating to financial accounts, digital assets and electronic money products. The amendments have been issued by the Central Board of Direct Taxes (CBDT) under the Ministry of Finance through Notification No. 19/2026 dated 5th March 2026, published in the Gazette of India as G.S.R. 158(E). These amendments have been made in exercise of the powers conferred under section 295 read with section 285BA of the Income-tax Act, 1961, and shall come into force with effect from 1 January 2026.
The amendments primarily modify Rules 114F, 114G and 114H of the Income-tax Rules, 1962, which deal with the framework for reporting financial accounts and exchange of information under international tax cooperation arrangements such as the Common Reporting Standard (CRS). The revised provisions expand the scope of reporting requirements to include certain digital financial instruments, including central bank digital currencies, specified electronic money products and relevant crypto-assets. The changes aim to align India’s tax reporting framework with emerging global standards on transparency in digital financial transactions and cross-border financial information exchange.
Under the amendments to Rule 114F, new definitions and categories have been introduced to cover digital financial assets and institutions handling such assets. The rules clarify that “central bank digital currencies” (CBDCs) refer to digital fiat currencies issued by a central bank. The concept of “relevant crypto-asset” has also been defined to include crypto-assets that are not central bank digital currencies or specified electronic money products. Further, the rules expand the definition of depository accounts to include accounts representing specified electronic money products or accounts holding central bank digital currencies on behalf of customers. The amendments also provide conditions under which certain depository accounts representing electronic money products with limited balances may be excluded from reporting obligations.
The amendments also introduce the concept of “Specified Electronic Money Product”, defined as a digital representation of a single fiat currency issued on receipt of funds for payment transactions and redeemable at par value. Such products must meet prescribed regulatory conditions and must represent a claim on the issuer denominated in the same fiat currency. The rules clarify that products created solely for facilitating fund transfers may not qualify as specified electronic money products if the funds are held beyond specified timelines or without transfer instructions.
Further, the amendments expand the category of entities treated as financial institutions for reporting purposes. Entities that hold specified electronic money products or central bank digital currencies for the benefit of customers may be treated as depository institutions under the rules. The notification also introduces the category of “Qualified Non-Profit Entity”, defined as an entity resident in India operating exclusively for charitable, religious, scientific, educational, cultural or similar public welfare purposes, which is exempt from income tax and meets specified conditions regarding ownership, governance and distribution of assets.
Changes have also been made to Rule 114G, which prescribes the reporting requirements for financial institutions. Under the revised provisions, reporting financial institutions are required to maintain and report additional information for accounts other than U.S. reportable accounts. This includes information on whether valid self-certification has been obtained from the account holder, whether the account is a joint account and the number of joint account holders. Financial institutions must also report the role by virtue of which a reportable person is treated as a controlling person of an entity, and maintain information on the type of account as well as whether it is a pre-existing or new account.
The amended rules also provide that financial institutions must obtain the taxpayer identification number (TIN) and date of birth while updating information relating to pre-existing accounts in accordance with requirements under the Prevention of Money-Laundering Act, 2002. Additionally, certain reporting obligations relating to the gross proceeds from the sale or redemption of financial assets may not apply where such transactions are already reported under the Crypto-Asset Reporting Framework, subject to specified conditions.
Modifications to Rule 114H clarify the timelines and procedures for due diligence and identification of reportable accounts under the amended reporting framework. The rules also provide that, in exceptional circumstances where self-certification cannot be obtained for a new account within the prescribed time, the reporting financial institution may temporarily apply due diligence procedures applicable to pre-existing accounts until such certification is obtained and validated. The notification further clarifies that exchange of information relating to transactions in relevant crypto-assets shall be carried out solely for the purpose of tax administration by the concerned jurisdictions.
The amendments are intended to strengthen transparency in financial transactions involving emerging digital assets and align India’s tax reporting system with evolving international standards on financial account information exchange. The move is expected to enhance the ability of tax authorities to track cross-border financial activity and ensure effective tax compliance in the digital economy.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/03/CBDT-Notification-No.-19-2026.pdf
