5 major changes in tax disclosure rules by CBDT and what they mean for taxpayers

Through a notification dated March 5, 2026, the Central Board of Direct Taxes (CBDT) has introduced certain amendments to the Income-tax Rules, 1962, particularly Rules 114F, 114G and 114H, which govern the reporting of financial accounts under section 285BA of the Income-tax Act, 1961 in line with the Common Reporting Standard (CRS) framework for exchange of financial account information.

Effective from January 1, 2026, these amendments seek to expand the scope of reportable financial accounts and align the Indian reporting framework with emerging international standards relating to digital assets and crypto-assets.

According to CA Dr Suresh Surana, following are the key changes introduced by the new amendment of rules:

1) Financial assets to include crypto-assets

"The amendments to Rule 114F(2) provide that, for accounts other than U.S. reportable accounts, the term 'financial asset' shall also include any interest in a relevant crypto-asset, including derivatives such as futures, forward contracts or options linked to such crypto-assets," Dr Surana said.

He further said that a new definition of “relevant crypto-asset” has been introduced under Rule 114F(5A), which broadly covers crypto-assets that are not central bank digital currencies or specified electronic money products or for which the reporting crypto-asset service provider has adequately determined that it cannot be used for payment or investment purposes.

2) New definition of CBDC and Specified Electronic Money Product

The amendments introduce new definitions in Rule 114F(1) and related explanations, including the definition of “Central Bank Digital Currency (CBDC).” CBDC now means any digital fiat currency issued by a central bank.

Rule 114F(9A) has introduced the concept of a “specified electronic money product.” It would mean a digital representation of fiat currency issued upon receipt of funds and redeemable at par value, which may be used for payment transactions. Correspondingly, the definition of “depository account” under Rule 114F(1) has been expanded to include accounts representing such electronic money products or accounts holding CBDCs on behalf of customers, Dr Surana said.

3) New reporting obligations for banks and financial institutions

Following the amendments, banks and financial institutions will be required to collect and report more detailed information on account holders and controlling persons.

"In particular, financial institutions are now required to report additional information in relation to reportable accounts, including the status of self-certification, details of joint accounts and number of account holders, the classification of accounts as new or pre-existing, and the role through which an individual qualifies as a controlling person in the case of entity accounts," Dr Surana said.

The amendment has mandated reporting of gross proceeds from the sale or redemption of financial assets where the institution acts as a custodian, broker or agent, and mandate the collection of additional identification details such as taxpayer identification number (TIN) and date of birth when updating pre-existing account information in accordance with PMLA requirements.

Further, the new rules provide that reporting of crypto-asset transactions under the CRS framework may be dispensed with where such transactions are already reported under the Crypto-Asset Reporting Framework (CARF).

4) Avoidance of duplication with crypto reporting frameworks

A new Rule 114G(6A) has been introduced. It says that gross proceeds from the sale or redemption of financial assets need not be reported under the CRS framework to the extent such information is already reported under the Crypto-Asset Reporting Framework (CARF).

Apart from the above, Rule 114F(1)(h)(viii) has been introduced, which provides that certain depository accounts representing electronic money products will not be treated as reportable accounts where the rolling ninety-day average aggregate account balance does not exceed USD 10,000 during the reporting period. The amendments have also introduced an additional category of excluded accounts under Rule 114F(1)(h)(viii) for accounts opened exclusively for the purpose of company incorporation or capital increase, subject to specified conditions such as blocking of funds until confirmation of incorporation and closure or conversion of the account thereafter.

5) Reporting of equity interest holders in investment entities

Dr Surana said that the amendment also introduces Rule 114G(1)(fa), which requires financial institutions to report the role through which a reportable person holds an equity interest in an investment entity that is structured as a legal arrangement, for example, certain trusts or similar structures. This provision enhances transparency regarding ownership interests in investment vehicles.

How will the new rules impact individual taxpayers?

The tax expert said that the amendments introduced through the Income-tax (Amendment) Rules, 2026 primarily impose reporting and due diligence obligations on banks and other reporting financial institutions. However, they may indirectly affect individuals.

"In particular, individuals may be required to provide additional information to financial institutions, such as self-certification of tax residency, taxpayer identification number (TIN), and other identification details, in order to facilitate compliance with the reporting requirements under section 285BA of the IT Act 1961 and Rules 114F to 114H of the Income-tax Rules, 1962," said Dr Surana.

Further, the expansion of the reporting framework to include crypto-assets, electronic money products and certain digital asset holdings may result in increased reporting of such financial information by institutions to tax authorities.

"While individuals are not directly subject to the reporting obligations, the strengthened reporting and due diligence requirements imposed on financial institutions may indirectly lead to greater disclosure, transparency and tax oversight in relation to individuals’ financial accounts and digital asset holdings," the expert said.