India has revised the income tax rules to broaden the scope of financial account reporting from this year.
The updated framework will cover crypto assets, central bank digital currencies (CBDCs) and specific electronic money products.
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The Central Board of Direct Taxes (CBDT) has formally notified the changes, according to an Economic Times report.
The definition of “financial assets” was expanded to include CBDCs and a range of electronic money instruments within the tax reporting net.
It now captures income streams such as interest linked to crypto and crypto-related holdings, reflecting a move towards fuller tax reporting of digital asset activity.
Under the changes, crypto asset service providers and certain categories of financial institutions will be obligated to furnish information on transactions and balances involving these assets to the tax authorities.
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By GlobalDataThe definition of “depository institutions” has been reworked to include accounts that represent electronic money products or that hold CBDCs.
In particular situations, accounts that maintain CBDCs on a customer’s behalf will be handled in the same way as conventional deposit accounts.
Banks and depositories will have to monitor accounts with a higher degree of detail than before, according to the publication. This includes more granular tracking of holdings, joint accounts and controlling persons.
New conditions have also been set for accounts used in connection with company formation or capital raising. Some depository accounts with year-end balances below $10,000 are excluded from these requirements.
Financial institutions must keep valid self-certifications on record and obtain taxpayer identification numbers and dates of birth, in alignment with the Prevention of Money-Laundering Act, 2002.
These obligations cover both existing and newly opened accounts. They also extend to joint account holders, controlling persons, equity interests and account categories where the balance exceeds $10,000.
However, the amended rules are confined to non-US accounts.
