Income Tax Rules 2026: Financial Institutions Must Report Crypto and Digital Currency Holdings

The Central Board of Direct Taxes (CBDT) under the Ministry of Finance (Department of Revenue) has issued an official notification dated March 25, 2026, informing us that the Central Government has made some significant changes to the Income-tax Rules, 1962. These amendments mainly concern widening the ambit of “financial assets” to include crypto assets, central bank digital currencies (CBDCs), and specified electronic money products.

The action has been taken in exercise of the powers granted under Section 295 read with Section 285BA of the Income-tax Act, 1961 (43 of 1961). As per the notification, the updated rules will be called the Income-tax (Amendment) Rules, 2026, and will take effect from January 01, 2026.

Amendment introduced to Rule 114F, Rule 114G, and Rule 114H of the Income-tax Rules, 1962.

Rule 114F of Income Tax Rules 1962:

The government has introduced significant changes to Rule 114F of the Income Tax Rules 1962, which basically provides a basic structure to the financial institutions for reporting information on foreign accounts under FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard).

This rule requires reporting information about US reportable accounts, including collecting self-certification from account holders. The new amendments mainly update and clarify some of the definitions used in this rule.

Rule 114G of Income Tax Rules 1962:

Rule 114F of the Income Tax Rules 1962 mentions what financial institutions must report to the tax authorities about certain accounts. Basically, the rules say that the financial institutions must report details related to reportable accounts like interest, dividends, and other income earned in the account.

As per the new change in the said rule, financial institutions must also report whether the account holder has given a valid self-certification, whether the account is a joint account, and how many people hold the joint account, including the number of joint account holders.

Rule 114H of Income Tax Rules 1962:

Rule 114H of the Income Tax Rules requires financial institutions to carefully check their customers to find out if they are tax residents of another country and report foreign tax residency accounts.

Financial Institutions are required to follow the same checks used in anti-money laundering rules to identify the real people who control the account in case customers are not from the US, even if it is not legally required under the Prevention of Money Laundering Act (PMLA), 2002.