India Brings Cryptocurrency, Digital Wallets Under Stricter Tax Reporting

The Indian government has taken a significant step in bringing digital assets under its tax scanner. The new income tax rules, which came into effect on January 1, 2026, require banks, financial institutions, and crypto service providers to report their customers' cryptocurrency holdings and transactions to the Income Tax Department.

This move is part of an international effort led by the Organisation for Economic Co-operation and Development (OECD) to bring digital assets under the same financial reporting discipline as traditional banking. The new rules will affect India's large and growing community of cryptocurrency investors, who will now have to report any exchange of cryptocurrency as a reportable financial transaction.

However, the government has offered some relief to smaller users by exempting electronic money accounts and digital wallets that maintain a balance below USD 10,000 throughout the year from the same level of reporting. Non-profit organisations working in various fields have also been given a special category - Qualified Non-Profit Entity - which exempts them from certain reporting requirements.

The new rules are designed to track digital money flows and prevent tax evasion, and India's move signals its participation 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.