Amendment to Income-tax Rules Regarding Financial Account Reporting

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MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 5th March, 2026

G.S.R. 158(E).— In exercise of the powers conferred by section 295 read with section 285BA of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax _________ (Amendment) Rules, 2026. (2) They shall come into force on the 1st day of January, 2026.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in Rule 114F,— (a) in clause (1),—

• (A) after sub-clause (v), in the Explanation,—

• (I) in clause (a), the following provisos shall be inserted, namely:– “Provided that for an account other than a U.S. reportable account, the provision of this clause shall apply with the effect that the phrase “financial Institution in the ordinary course of a banking or similar business” shall be substituted by the phrase “depository institution”:

           Provided further that for an account other than a U.S. reportable account, a “depository account” shall also include —
  

• (i) an account or notional account that represents all specified electronic money products held for the benefit of a customer; and

• (ii) an account that holds one or more central bank digital currencies for the benefit of a customer’;

• (II) after clause (a), the following clause shall be inserted, namely:– ‘(aa) “central bank digital currencies" means any digital fiat currency issued by a Central Bank;’;

• (III) in clause (h),—

• (i) in sub-clause (vi), after item (D), the following shall be inserted, namely:–– “(E) a foundation or capital increase of a company provided that the account satisfies the following requirements, namely: —

• (i) the account is used exclusively to deposit capital that is to be used for the purpose of the foundation or capital increase of a company, as prescribed by law;

• (ii) any amounts held in the account are blocked until the Reporting Financial Institution obtains an independent confirmation regarding the foundation or capital increase;

• (iii) the account is closed or transformed into an account in the name of the company after the foundation or capital increase;

• (iv) any repayments resulting from a failed foundation or capital increase, net of service provider and similar fees, are made solely to the persons who contributed the amounts; and

• (v) the account has not been established more than 12 months ago:

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               Provided that the provisions of item (E) shall apply in respect of an account other than a U.S. reportable account;”;

• (ii) after sub-clause (vii), the following sub-clause shall be inserted, namely:–– “(viii) a depository account, other than U.S. reportable account, which represents all specified electronic money products held for the benefit of a customer, if the rolling average ninety-day end-of-day aggregate account balance or value during any period of ninety consecutive days did not exceed USD 10,000 at any day during the calendar year or other appropriate reporting period;”;

  (b) in clause (2), after the proviso, the following proviso shall be inserted, namely:– “Provided further that for an account other than a U.S. reportable account, "financial asset" shall also include any interest (including a futures or forward contract or option) in a relevant crypto-asset;”;

  (c) in clause (3), in the Explanation,—

• (i) in clause (b), the following proviso shall be inserted namely:–– ‘Provided that for an account other than a U.S. reportable account, “depository institution” shall also include an entity that holds specified electronic money products or central bank digital currencies for the benefit of customers;’;

• (ii) in clause (c),—

• (I) in sub-clause (A), in item (iii), the following shall be inserted, namely:–– ‘Provided that for an account other than U.S. reportable account, the provisions of item (iii) shall apply with the effect that the phrase “financial assets” shall be substituted by the phrase “financial assets or relevant crypto-assets”.

           Provided further that for an account other than U.S. reportable account, the item (iii) shall not include the provision of services effectuating exchange transactions for or on behalf of customers.
  
           *Explanation.*— For the purposes of item (iii), the term “exchange transaction” means any –
  

• (i) exchange between relevant crypto-assets and fiat currencies; and

• (ii) exchange between one or more forms of relevant crypto-assets;”

• (II) in sub-clause (B), below Explanation 2, the following proviso shall be inserted, namely:–– “Provided that for an account other than a U.S. reportable account, the provisions of sub-clause (B) and Explanation 1 shall apply with the effect that the phrase “financial assets” shall be substituted by the phrase “financial assets or relevant crypto-assets”.”;

  (d) in clause (5),—

• (i) in sub-clause (a), in item (i), for the words “depository institution;”, the following shall be substituted, namely:–– “depository institution; or

• (ii) with respect to the activity of maintaining central bank digital currencies for account holders which are not financial institutions, governmental entities, international organizations or central banks:

       Provided that the provisions of item (ii) shall apply in respect of an account other than a U.S. reportable account;”;
  

[भाग II—खण्ड 3(i)] भारत का राजपत्र : असाधारण 11

• (ii) after sub-clause (h), the following sub-clause shall be inserted, namely:– “(ha) a qualified non-profit entity in respect of an account other than a U.S. reportable account;”;

• (iii) in the Explanation, after clause (M), the following clause shall be inserted namely:–– “(MA) “Qualified Non-Profit Entity” means an entity resident in India that has obtained confirmation by the Income-tax Department or other governmental authority of India that such entity meets all of the following conditions, namely: —

• (i) it is established and operated in India exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in India and it is a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare;

• (ii) it is exempted from income tax in India;

• (iii) it has no shareholders or members who have a proprietary or beneficial interest in its income or assets;

• (iv) the applicable laws of India or the entity’s formation documents do not permit any income or assets of the entity to be distributed to, or applied for the benefit of, a private person or a noncharitable entity other than pursuant to the conduct of the entity’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the entity has purchased; and

• (v) the applicable laws of India or the entity’s formation documents require that, upon the entity’s liquidation or dissolution, all of its assets be distributed to a Governmental entity or other entity that meets the conditions set out in (i) to (v), or escheat to the Government of India or any political sub-division thereof;”;

  (e) after clause (5), the following clause shall be inserted, namely:–– “(5A) “relevant crypto-asset” means any crypto-asset––

• (a) that is not a Central Bank Digital Currency; or

• (b) that is not a specified electronic money product; or

• (c) for which the reporting crypto-asset service provider has adequately determined that it cannot be used for payment or investment purposes;”;