The Central Board ofDirect Taxes (CBDT) has notified important changes to the Income Tax Rules, 1962, through the Income Tax (First Amendment) Rules, 2026. Effective January 1, 2026, the amendment significantly widens the scope of “financial assets” to include crypto-assets, central bank digital currencies (CBDCs), and specified electronic money products.

Under the revised framework, depository accounts will now cover holdings of CBDCs, which means any digital fiat currency issued by a Central Bank and electronic money products maintained for customers. Depository accounts expanded, such as :

• Electronic money products.
• account that holds one or more CBDCs.

Small e-money accounts (under USD 10,000 average balance) are treated differently, with lighter reporting.

The rules also introduce a new category of “relevant crypto-assets”, defined as digital assets that are neither CBDCs nor specified e-money products, and which may not be usable for payments or investments.

It has also introduced a new category of “relevant crypto-assets”, defined as digital assets that are neither CBDCs nor specified e-money products, and which may not be usable for payments or investments.

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The amendment requires strengthened reporting obligations for financial institutions. They must now record whether account holders have provided valid self-certification of tax residency, disclose whether the accounts are jointly held, and specify whether the account is new or pre-existing, and also institutions must capture details of controlling persons in entities, including their roles and certification status.

It is very notable that the recognition of Qualified Non-Profit Entities, which are exempt from income tax and operate exclusively for charitable, religious, scientific, cultural, or social welfare purposes. Also, such entities must meet strict conditions, including restrictions on profit distribution and mandatory transfer of assets to the government or similar entities upon dissolution.

By expanding the definition of financial assets and tightening compliance requirements, the CBDT aims to align India’s tax reporting framework with global standards.

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