• Notification Date: 10-02-2025
• Notification No: N/A

New Cryptocurrency Compliance Regulation: Investor and Institution On-the-Spot Reporting Duty

In order to monitor digital assets closely and accurately, the Income-tax Act, 1961, has formulated new compliance requirements on cryptocurrency transactions under it. For this purpose, Finance Minister Nirmala Sitharaman has inserted Section 285BAA into the proposed insertion, which requires investors to furnish information on their cryptoasset transaction. This is part of its effort to comply with the global CARF through which tax-relevant information regarding cryptocurrencies will be automatically exchanged.

All the entities dealing in crypto-assets are required to file the transaction details with the tax authorities within a specific timeframe from 1st April, 2026. Any errors in submissions will be communicated to the respective entities within 30 days, for rectification or facing penalties. Notices may be issued by the income-tax authority in case of non-compliance.

It expands the term "virtual digital assets" to encompass those that fall under cryptoassets, that is, one or more forms of cryptographic security and distributed ledger technology. More inclusive coverage it will be while helping build the strength behind regulation of this crypto sector.

It is coming after a 30% tax on crypto gains was announced for 2022. Critics claim, however, that new regulations remain too vague and do not improve much on previous provisions. Despite this, the government remains committed to streamlining this growth market by providing more clarity.