Crypto, digital wallets now under tax scanner

The Central 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, came into effect from January 1, 2026.

The Central Board of Direct Taxes (CBDT) issued the notification amending the Income Tax Rules, 1962. The Income Tax (Amendment) Rules, 2026, were notified on March 5, 2026, and have been effective retrospectively since January 1, 2026.

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 be treated as bank accounts for tax reporting purposes. Any customer whose wallet balance crosses the equivalent of roughly Rs 8.3 lakh at any point during the year will come under mandatory reporting.

The government has also formally recognised the Digital Rupee, the Reserve Bank of India's Central Bank Digital Currency, within the tax rules.