New Section 285BAA – Reporting of Crypto-Asset Transactions

New Section 285BAA – Reporting of Crypto-Asset Transactions

With effect from 1st April 2026, a new provision will be added to the Income-tax Act requiring reporting of crypto-asset transactions.

Key features of Section 285BAA:

1. Who must report
   • Any “reporting entity” (as may be notified) dealing with crypto-assets must report transactions to the income-tax department.
   • The format, timelines, and reporting process will be prescribed by the authorities.
2. Defective reports
   • If a report is found to have mistakes, the income-tax authority will notify the reporting entity.
   • The entity will have 30 days (or an extended period, if allowed) to correct the mistakes.
   • If not corrected in time, the report will be treated as containing inaccurate information.
3. Failure to report
   • If the report is not submitted on time, the income tax authority may issue a notice.
   • The entity will then have up to 30 days from the date of notice to file the report.
4. Correcting inaccuracies
   • If a reporting entity discovers any errors in the report already filed, it must:
     • Inform the income-tax authority, and
     • Submit corrected information within 10 days of discovering the error.
5. The government’s rule-making powers
   The Central Government may issue rules to specify:
   • Which entities must register with the income-tax authority?
   • What information they must maintain and in what manner, and
   • What due diligence steps must they follow to identify crypto-asset users and owners?
6. Definition
   • “Crypto-asset” will have the same meaning as defined in Section 2(47A)(d) of the Income-tax Act.