Banks to seek more details from account holders under amended Income Tax Rules, 1962; check what new information you may have to share

A new amendment has been made to the Income Tax Rules, 1962, which now requires banks to collect and report more detailed information on account holders and controlling individuals.

Specifically, financial institutions must now provide additional information regarding reportable accounts. This includes the status of self-certification, details of joint accounts and the number of account holders, whether the accounts are classified as new or pre-existing, and the role that qualifies someone as a controlling person for entity accounts.

The Central Board of Direct Taxes (CBDT) has notified three new amendments to Income Tax Rules, 1962. CBDT Notification (No. 19/2026) dated March 5, 2026 said that three tax rules (Rule 114F, 114G and 114H) have been amended in line with Foreign Account Tax Compliance Act and Common Reporting Standard in India.


While these new reporting regulations primarily focus on foreign tax residents, Indian residents are still required to provide information so that banks can assess whether their accounts need to be reported or not.

What are the new reporting obligations for banks and financial institutions?

Chartered Accountant Suresh Surana explained to ET Wealth Online: The amendments require reporting of gross proceeds from the sale or redemption of financial assets where the institution acts as a custodian, broker or agent, and mandate the collection of additional identification details such as taxpayer identification number (TIN) and date of birth when updating pre-existing account information in accordance with PMLA requirements.

Surana says according to the amended rules, the reporting of crypto-asset transactions under the CRS framework may be dispensed with if such transactions are already reported under the Crypto-Asset Reporting Framework (CARF).

Kumarmanglam Vijay, Partner and head of practice, direct tax, JSA Advocates and Solicitors told ET Wealth Online: The new reporting obligations for banks and reporting financial institutions (RFIs) under Rule 114G of the Income Tax Rules, 1962 specifically target accounts other than US reportable accounts which are as under:

1. Account holder and joint account details

• RFIs must maintain and report whether the account holder has provided a valid self-certification. This requirement also applies to each reportable person who is a controlling person of an entity.
• Banks and RFIs must report whether the account is a joint account and explicitly state the number of joint account holders.
• RFIs are required to maintain and report the specific type of account, indicating whether it is a pre-existing account or a new account.

2. Identifying specific roles

• The reporting must include the specific role by virtue of which each reportable person acts as a controlling person of an entity.
• In case an equity interest is held in an investment entity that is a legal arrangement, the RFI must report the role(s) by virtue of which the reportable person is an equity interest holder.
• For reportable accounts maintained as of December 31, 2025, information regarding the roles of controlling persons or equity interest holders is only required to be reported if it is available in the institution's electronically searchable data for the reporting periods ending by the second calendar year following that date.

3. PMLA-driven updates

• Whenever a bank or RFI is required to update information relating to a pre-existing account under the rules of the PMLA, it must obtain the account holder's TIN and date of birth.

4. Exemption for crypto-asset reporting

• Banks and RFIs are not required to report the gross proceeds from the sale or redemption of a financial asset if those proceeds are already reported under the CARF. This specific exemption does not apply to U.S. reportable accounts.

How do these new amendments impact high net worth individuals?

Vijay from JSA Advocates and Solicitors points out that for high net worth individuals (HNIs), these amendments could lead to piercing the veil on offshore trusts and family offices.

Previously, banks and RFIs only had to report that an HNI was a "controlling person" of an entity, without specifying the nature of their control. For non-U.S. accounts, reporting financial institutions must now maintain and report the specific role by virtue of which each reportable person is a controlling person of the entity.

Vijay says: “Further, the HNIs decentralized finance or digital offshore wallets will now be reported to the Income Tax Department with the same regularity as a traditional savings account.”

How do these new rules impact individuals in an indirect way?

Surana says that although the amendments introduced through the Income-tax (Amendment) Rules, 2026 primarily impose reporting and due diligence obligations on banks and other reporting financial institutions, they may indirectly affect individuals.

According to Surana, “in particular, individuals may be required to provide additional information to financial institutions, such as self-certification of tax residency, taxpayer identification number (TIN), and other identification details, in order to facilitate compliance with the reporting requirements under section 285BA of the Income Tax Act 1961 and Rules 114F to 114H of the Income-tax Rules, 1962.”

Further, the expansion of the reporting framework to include crypto-assets, electronic money products and certain digital asset holdings may result in increased reporting of such financial information by institutions to tax authorities.

Surana says that the amendments also enhance transparency with respect to joint accounts and controlling persons of entities, which may lead to greater visibility of individuals’ financial interests and transactions under the Common Reporting Standard (CRS) framework.

Surana says: “Accordingly, while individuals are not directly subject to the reporting obligations, the strengthened reporting and due diligence requirements imposed on financial institutions may indirectly lead to greater disclosure, transparency and tax oversight in relation to individuals’ financial accounts and digital asset holdings.”

What the new rules say about the expanded tax reporting relating to crypto?

Vijay from JSA Advocates and Solicitors says that the traditional definitions have been amended to specifically target crypto-assets and digital currencies and the newly amended rules mandate the following regarding crypto:

1. Inclusion of crypto in "financial assets"

• The definition of a "financial asset" has been expanded to include any interest in a "relevant crypto-asset" for accounts other than U.S. reportable accounts.
• This inclusion expressly captures futures, forward contracts, or options in these relevant crypto-assets.
• A "relevant crypto-asset" is defined as a crypto-asset that is not a CBDC or a specified electronic money product or is an asset for which the reporting provider has determined it cannot be used for payment or investment purposes.

2. Carve-out for crypto exchanges

• For non-U.S. reportable accounts, the rules specify that managing financial assets does not include providing services that effectuate exchange transactions on behalf of customers.
• These excluded exchange transactions refer to the exchange between relevant crypto-assets and fiat currencies, as well as the exchange between different forms of relevant crypto-assets.

Why were these amendments needed?

Sandeep Bhalla, Partner, Dhruva Advisors said to ET Wealth Online that these rules form the backbone of India’s reporting obligations under the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS), which require financial institutions to identify and report accounts held by foreign tax residents.

Bhalla says: “The amendments come in response to global developments led by the OECD, particularly the Crypto-Asset Reporting Framework (CARF) and updates to the CRS.”

According to Bhalla, a key change under Rule 114F expands the definition of financial accounts and institutions to include emerging digital financial products such as relevant crypto-assets, specified electronic money products (SEMPs) and central bank digital currencies (CBDCs), thereby widening the scope of entities and assets covered under the CRS reporting framework.

Bhalla says that changes to Rule 114H clarify due diligence procedures for identifying reportable accounts. Accounts that become financial accounts due to the expanded CRS definitions will be treated as new accounts from January 1, 2026, while those existing as on 31 December 2025 will be treated as pre-existing accounts.

According to Bhalla, the amendments also align due diligence procedures more closely with AML/KYC processes under the Prevention of Money Laundering Act, 2002. Where relevant information is not otherwise required under AML (Anti-money Laundering) rules, financial institutions must apply similar procedures to identify controlling persons.

Bhalla says that these amendments significantly expand India’s CRS reporting framework to cover emerging digital assets while maintaining a risk-based compliance approach. By bringing crypto-assets, electronic money products and CBDCs within the reporting ecosystem, India aims to ensure that cross-border tax transparency keeps pace with the rapidly evolving digital financial landscape.

Compilation of all the changes

Surana says that the Central Board of Direct Taxes (CBDT), through a Notification dated 5 March 2026, has introduced amendments to the Income-tax Rules, 1962, particularly Rules 114F, 114G and 114H, which govern the reporting of financial accounts under Section 285BA of the Income-tax Act, 1961 in line with the Common Reporting Standard (CRS) framework for exchange of financial account information. These amendments are effective from 1 January 2026.

The amendments mainly seek to expand the scope of reportable financial accounts and align the Indian reporting framework with emerging international standards relating to digital assets and crypto-assets. Some of the key changes are as follows:

• Expansion of the definition of financial assets to include crypto-assets

The amendments to Rule 114F(2) provide that, for accounts other than U.S. reportable accounts, the term “financial asset” shall also include any interest in a relevant crypto-asset, including derivatives such as futures, forward contracts or options linked to such crypto-assets.

Further, a new definition of “relevant crypto-asset” has been introduced under Rule 114F(5A), which broadly covers crypto-assets that are not central bank digital currencies or specified electronic money products or for which the reporting crypto-asset service provider has adequately determined that it cannot be used for payment or investment purposes.

• Introduction of definitions of CBDC and Specified Electronic Money Product

The amendments introduce new definitions in Rule 114F(1) and related explanations, including the definition of “Central Bank Digital Currency (CBDC)”, which refers to any digital fiat currency issued by a central bank.

Further, Rule 114F(9A) introduces the concept of a “specified electronic money product,” mainly referred to as a digital representation of fiat currency issued upon receipt of funds and redeemable at par value, which may be used for payment transactions.

Correspondingly, the definition of “depository account” under Rule 114F(1) has been expanded to include accounts representing such electronic money products or accounts holding CBDCs on behalf of customers.

• Exclusion for certain low-value electronic money accounts

A new provision inserted under Rule 114F(1)(h)(viii) provides that certain depository accounts representing electronic money products will not be treated as reportable accounts where the rolling ninety-day average aggregate account balance does not exceed USD 10,000 during the reporting period.

• Exclusion of certain capital contribution accounts

The amendments introduce an additional category of excluded accounts under Rule 114F(1)(h)(viii) for accounts opened exclusively for the purpose of company incorporation or capital increase, subject to specified conditions such as blocking of funds until confirmation of incorporation and closure or conversion of the account thereafter.

• Additional reporting obligations for financial institutions

The amendments to Rule 114G(1) require reporting financial institutions to maintain and report additional information in relation to reportable accounts, including:

• Whether a valid self-certification has been obtained from the account holder;
• Whether the account is a joint account, including the number of joint account holders;
• The type of account, including whether it is a new or pre-existing account; and
• In the case of entity accounts, the role through which a person qualifies as a controlling person.

Further, Rule 114G(1)(e)(ii) has been amended to clarify that reporting must include gross proceeds from the sale or redemption of financial assets where the reporting financial institution acts as a custodian, broker or nominee.

• Avoidance of duplication with crypto reporting frameworks

A new Rule 114G(6A) provides that gross proceeds from the sale or redemption of financial assets need not be reported under the CRS framework to the extent such information is already reported under the Crypto-Asset Reporting Framework (CARF).

• Reporting of equity interest holders in investment entities

The amendment also introduces Rule 114G(1)(fa), which requires financial institutions to report the role through which a reportable person holds an equity interest in an investment entity that is structured as a legal arrangement (for example, certain trusts or similar structures). This provision enhances transparency regarding ownership interests in investment vehicles.

• Collection of additional identification details for existing accounts

In accordance with the amended Rule 114G(4), reporting financial institutions are required to obtain the taxpayer identification number (TIN) and date of birth when updating information relating to pre-existing accounts in accordance with the rules framed under the Prevention of Money Laundering Act, 2002 (PMLA).

• Amendments to due diligence procedures

Changes have also been introduced under Rule 114H, which prescribes due diligence procedures for identifying reportable accounts.

Rule 114H(7)(aa) provides that in exceptional circumstances where a reporting financial institution is unable to obtain self-certification for a new account in time, the institution may apply the due diligence procedures applicable to pre-existing accounts until such self-certification is obtained and validated.

Further, Rule 114H(2) has been amended to clarify the relevant dates for identifying reportable accounts as follows:

Provision	Category of Account	Relevant Date under Rules	Explanation
New Accounts
Rule 114H(2)(d)(ii)	Other than US reportable accounts (existing CRS framework)	1 January 2016	Accounts treated as financial accounts under the existing CRS framework continue to be identified from this date.
Rule 114H(2)(d)(ii) (as amended)	Accounts treated as financial accounts solely due to CRS amendments	On or after 1 January 2026	Accounts that become financial accounts only due to the amendments to the CRS framework will be considered financial accounts from this date.
Pre-Existing Account
Rule 114H(2)(h)(II)	Other than US reportable accounts (existing CRS framework)	31 December 2015	This remains the reference date for identifying pre-existing accounts under the earlier CRS framework.
Rule 114H(2)(h)(II) (as amended)	Accounts treated as financial accounts solely due to CRS amendments	31 December 2025	Where accounts qualify as financial accounts only because of the CRS amendments, this date will be used as the reference date for identifying such pre-existing accounts.

Source: CA Suresh Surana