The Indian government has introduced Section 285BAA in the Income-tax Act, making it mandatory for reporting entities to disclose details of crypto transactions. This section will come into effect from April 1, 2026.
If you are a crypto exchange, broker, or any entity involved in crypto transactions, here’s what you need to know about the new compliance requirements.
Who Needs to Report Crypto Transactions?
The new rule applies to reporting entities, which will be defined by the government. These entities will be required to:
✅ Register with the Income Tax Department
✅ Report crypto transactions in a specified format
✅ Follow record-keeping and due diligence requirements
The exact details of who qualifies as a reporting entity will be clarified in upcoming government notifications.
Key Provisions of Section 285BAA
1. Mandatory Crypto Transaction Reporting
- If you are a reporting entity, you must submit crypto transaction details to the tax department within a specified time frame.
2. Rectification of Errors
- If there’s a mistake in your report, the tax department will notify you.
- You must correct the errors within 30 days.
- Failure to do so may result in penalties for inaccurate reporting.
3. Consequences of Non-Compliance
- If you fail to file the report on time, the Income Tax Department will issue a notice, giving you 30 days to submit it.
4. Reporting Corrections
- If you realize there was an error in your report after submission, you must notify the tax department within 10 days and submit the correct information.
5. Due Diligence Requirements
The government will issue rules specifying:
✅ Who must register with tax authorities
✅ How records should be maintained
✅ How crypto users must be verified
Why Is This Important?
The introduction of Section 285BAA aims to:
🔹 Increase transparency in crypto transactions
🔹 Help the government track taxable crypto income
🔹 Align India’s crypto regulations with global tax standards
What Should Crypto Businesses Do?
💡 Stay Updated: Watch for official notifications on reporting requirements.
💡 Maintain Records: Keep detailed logs of crypto transactions.
💡 Prepare for Reporting: Ensure compliance before the April 1, 2026 deadline.
Final Thoughts
Section 285BAA marks a big shift in India’s crypto tax regulations. If you handle crypto transactions, it’s crucial to understand these rules and prepare in advance to avoid penalties.
Need a detailed guide on how to comply? Let us know in the comments! 🚀
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About the Author
CA Bhuvnesh Kumar Goyal
Fellow Chartered Accountant, LLB, B.com, Forensic Accountant and Fraud Detection Professional
CA Bhunvesh Kumar Goyal, a seasoned Chartered Accountant with 15+ years of experience, specializes in Income Tax, GST, MSME advisory, startups, audits, company registration, and business structuring. He also provides expert guidance on ESG, BRSR, the Companies Act, crypto transactions, and transfer pricing. With a practical approach, he helps businesses stay compliant while optimizing financial and operational efficiency.
