New Section 285BAA on Crypto transactions under IncomeTax:
New Section 285BAA, introduced in the Union Budget 2025 and effective from April 1, 2026, requires certain entities to report detailed information on crypto asset transactions to the government, enhancing tax compliance and transparency.
This new section mandates reporting entities to provide transaction details, names, PANs, and other information about the transactions and counterparties.
Reporting entities must also comply with government-specified rules for registration, due diligence, and record-keeping.
Key aspects of Section 285BAA
Mandatory reporting: Specified entities, such as crypto exchanges and intermediaries, must submit a statement of crypto asset transactions to the tax authorities.
Information to be reported: The report must include details like names, PANs, transaction values, and counterparties involved in the transactions.
Correction of defects: If a submitted statement is defective, the reporting entity will be given 30 days to rectify it. Failure to do so will be treated as furnishing inaccurate information.
Reporting inaccuracies: Entities are required to inform the tax authority and provide corrected details within a specified time if they discover inaccuracies in their submitted information.
Government oversight: The Central Government will issue rules for the registration of reporting entities, the information to be maintained, and the due diligence required to identify crypto users.
Effective date: The provisions of this section will be effective from April 1, 2026.
1. The new section 285BAA requires specified “reporting entities” to furnish information regarding crypto-asset transactions to the income-tax authorities.
2. Section 285BAA provides the domestic legal foundation for India to:
Identify “reporting entities” (like crypto-exchanges, brokers, custodians)
Collect transaction-wise data.
Transmit the same through competent authority channels under automatic exchange of information (AEOI) protocols — just like Form 61A/61B under FATCA–CRS for financial assets.
3. Key Details of Section 285BAA
Reporting Entities: The Central Government is empowered to notify the specific persons or entities (such as crypto exchanges, brokers, and custodians) that qualify as “reporting entities” for the purpose of this section.
Information to be Furnished: Reporting entities must provide specified information in a statement, including details such as
The name and Permanent Account Number (PAN) of the crypto-asset user or owner.
Details of the transaction (e.g., type of transaction, value, counterparties). Information regarding crypto-asset holdings.
Team: Economiclawspractice.com
