NEW DELHI: The Central Government on Thursday announced new income tax rules that will bring cryptocurrency traders, digital wallet users and holders of the digital rupee under a stricter tax reporting net for the first time.
The changes, published in the official Gazette of India, come into effect from January 1, 2026.
The Central Board of Direct Taxes (CBDT), which functions under the Finance Ministry, issued the notification amending the Income Tax Rules, 1962. The move brings India’s tax framework in line with international standards being adopted by countries across the world to track digital money flows and prevent tax evasion.
Under the amended rules, banks, financial institutions and crypto service providers will now be legally required to report their customers’ cryptocurrency holdings and transactions to the Income Tax Department, just as they currently report bank deposits, mutual fund investments and other financial assets.
Digital wallets and electronic money products — the kind used daily by millions of Indians for online payments and money transfers — will now be treated as bank accounts for tax reporting purposes. Any customer whose wallet balance crosses the equivalent of roughly Rs 8.3 lakh (USD 10,000) at any point during the year will come under mandatory reporting.
The government has also formally recognised the Digital Rupee, RBI’s Central Bank Digital Currency, within the tax rules. Institutions that hold the Digital Rupee on behalf of customers will now have to report these holdings to tax authorities.
For the country’s large and growing community of cryptocurrency investors, the new rules mark a significant shift. Any exchange of cryptocurrency — whether selling crypto for rupees or swapping one cryptocurrency for another — will now be treated as a reportable financial transaction. Crypto service providers have been explicitly brought within the scope of reporting financial institutions.
Tax experts say this effectively closes a long-standing gap in India’s financial reporting system. “Until now there was no formal mechanism to track crypto holdings the way bank accounts are tracked. That changes from today,” said a senior tax consultant who did not wish to be named.
The new rules do offer some breathing room for smaller users. Electronic money accounts and digital wallets that maintained a balance below USD 10,000 throughout the year will not be subject to the same level of reporting. This protects the vast majority of ordinary digital payment users from additional compliance burdens.
Non-profit organisations working in religious, charitable, educational, scientific, cultural and social welfare fields have also been given a special category — Qualified Non-Profit Entity — which exempts them from certain reporting requirements, provided they obtain formal confirmation of their status from the Income Tax Department.
The amendment is part of a broader international effort led by Organisation for Economic Co-operation and Development (OECD) to bring digital assets under the same financial reporting discipline that governs traditional banking. Countries across Europe, Asia and the Americas are implementing similar frameworks. India’s move signals that it is ready to participate fully in the global exchange of financial information.
The notification makes clear that information shared between tax authorities about crypto transactions can only be used for tax administration and cannot be used for any other purpose — a privacy safeguard written into the rules themselves.
The Income Tax (Amendment) Rules, 2026 were notified on March 5, 2026 and are effective retrospectively from January 1, 2026. Citizens are advised to consult a qualified tax professional for personal guidance.