Our exchange has been told it is a 'reporting entity' for crypto-assets. What does section 285BAA actually require, and is section 115BBI part of the same regime?
Section 285BAA, inserted by the Finance Act 2025 with effect from 1 April 2026, requires a prescribed reporting entity in respect of a crypto-asset to furnish information about transactions in such crypto-assets in a statement, for such period and within such time, form and manner and to such income-tax authority as prescribed. If the authority thinks the statement defective it must intimate the defect and allow thirty days or longer to rectify, failing which the Act applies as if inaccurate information had been furnished; if no statement is filed the authority may serve a notice requiring one within not more than thirty days; and a reporting entity that later discovers an inaccuracy must inform the authority and furnish the correct information within ten days. The Central Government may prescribe registration of reporting entities, the nature and manner of maintaining information, and the due diligence for identifying crypto-asset users and owners. Section 115BBI is NOT part of this regime: it is a thirty per cent charge on the 'specified income' of certain funds, trusts, universities and hospitals under s.10(23C) and s.11, and has nothing to do with virtual digital assets.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2026-04-01, reported as Income-tax Act 1961, s.285BAA; inserted after s.285BA by the Finance Act 2025, w.e.f. 1-4-2026. It bears on section 285BAA, section 2(47A), section 115BBI, section 285BA of the Income Tax Act 1961, in Crypto & Virtual Digital Assets, Charitable Trusts & Exemption and Assessment & Scrutiny matters.
Section 285BAA is the reporting spine of the Indian crypto regime and it works quite differently from the charging and withholding provisions. It bites on the intermediary, not the taxpayer; its obligations are almost entirely defined by rules, so the section alone will not tell an exchange what to file; and it contains two traps. The first is sub-section (2): a defect not cured within the time allowed does not simply leave the statement defective, it makes the Act apply as if inaccurate information had been furnished, which is the language that engages the penalty consequences of misreporting in a statement. The second is sub-section (4), a self-reporting duty with a ten-day fuse that runs from the moment the entity 'comes to know or discovers' an inaccuracy — an obligation that no notice triggers and that an entity can breach without ever hearing from the department. Sub-section (5) is the provision under which registration, record-keeping and KYC-style due diligence for crypto-asset users are prescribed. For the practitioner acting for an individual rather than an exchange, the point is simpler and more urgent: from AY 2026-27 the department receives transaction-level data on crypto-assets from the reporting entities, and a client's undisclosed dealing has a short life expectancy. The reason s.115BBI needs to be kept away from all of this is that the two sections look alike from a distance — both charge or concern thirty per cent, both were the product of recent Finance Acts, and their numbers are adjacent to the VDA provisions — but s.115BBI is a trusts and institutions provision about accumulated and misapplied income and it has no VDA content at all. Citing it in a crypto matter is a marker of an unread pleading.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Not a case. The section applies to any person being a reporting entity, as prescribed, in respect of a crypto-asset.
A prescribed reporting entity must furnish information in respect of a transaction of a crypto-asset in a statement, for such period, within such time, in such form and manner and to such income-tax authority as prescribed (sub-section (1)). Where the prescribed authority considers the statement defective it may intimate the defect and give thirty days from intimation, or such further period as allowed, to rectify it; if the defect is not rectified the Act applies as if the person had furnished inaccurate information in the statement (sub-section (2)). Where the statement has not been furnished within the specified time the authority may serve a notice requiring it within a period not exceeding thirty days from service (sub-section (3)). A person who comes to know or discovers any inaccuracy in the information provided must inform the authority within ten days and furnish the correct information in the prescribed manner (sub-section (4)). The Central Government may by rules prescribe registration of such persons with the prescribed authority, the nature of the information and the manner of maintaining it, and the due diligence to be carried out for identifying any crypto-asset user or owner (sub-section (5)). 'Crypto-asset' has the meaning assigned to it in sub-clause (d) of clause (47A) of section 2 (sub-section (6)). Separately and unrelatedly, s.115BBI charges at thirty per cent the 'specified income' of a person in receipt of income on behalf of a fund or institution under s.10(23C)(iv), (v), (vi) or (via) or a trust or institution under s.11, allowing no deduction for expenditure or allowance and no set off of any loss in computing it, 'specified income' being defined by the Explanation to cover excess accumulation, deemed income under the specified provisions, and income losing exemption through the specified violations.
Not a judicial route. Section 285BAA sits beside s.285BA, the statement of financial transactions, and copies its architecture: a bare statutory duty whose content is left to rules, a defect-and-cure mechanism, a compel-by-notice mechanism, and a deeming provision that converts an uncured defect into inaccurate information so that the existing penalty machinery can operate without a new penalty section. Two things are added for crypto that s.285BA does not need. The first is the self-correction duty in sub-section (4), which is necessary because crypto transaction data is reconstructed from systems the entity itself controls and errors surface after filing rather than at it. The second is the rule-making power in sub-section (5) over registration and due diligence for identifying users and owners, which is what allows an Indian reporting framework to be aligned with international crypto-asset reporting standards; without a statutory due-diligence power the entity would have no obligation to know who its users are. Section 115BBI belongs to an entirely different scheme — the taxation of charitable and religious entities under ss.11 to 13 and s.10(23C) — and the only connection with the VDA provisions is that the Finance Act 2022 inserted both it and s.115BBH with effect from 1 April 2023.
(6) In this section, "crypto-asset" shall have the meaning assigned to it in sub-clause (d) of clause (47A) of section 2.
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Handle my notice → Ask a CA on WhatsAppSection 285BAA, inserted by the Finance Act 2025 with effect from 1 April 2026, requires a prescribed reporting entity in respect of a crypto-asset to furnish information about transactions in such crypto-assets in a statement, for such period and within such time, form and manner and to such income-tax authority as prescribed. If the authority thinks the statement defective it must intimate the defect and allow thirty days or longer to rectify, failing which the Act applies as if inaccurate information had been furnished; if no statement is filed the authority may serve a notice requiring one within not more than thirty days; and a reporting entity that later discovers an inaccuracy must inform the authority and furnish the correct information within ten days. The Central Government may prescribe registration of reporting entities, the nature and manner of maintaining information, and the due diligence for identifying crypto-asset users and owners. Section 115BBI is NOT part of this regime: it is a thirty per cent charge on the 'specified income' of certain funds, trusts, universities and hospitals under s.10(23C) and s.11, and has nothing to do with virtual digital assets. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 285BAA, section 2(47A), section 115BBI, section 285BA of the Income Tax Act 1961. It is reported as Income-tax Act 1961, s.285BAA; inserted after s.285BA by the Finance Act 2025, w.e.f. 1-4-2026. Section 285BAA is the reporting spine of the Indian crypto regime and it works quite differently from the charging and withholding provisions. It bites on the intermediary, not the taxpayer; its obligations are almost entirely defined by rules, so the section alone will not tell an exchange what to file; and it contains two traps. The first is sub-section (2): a defect not cured within the time allowed does not simply leave the statement defective, it makes the Act apply as if inaccurate information had been furnished, which is the language that engages the penalty consequences of misreporting in a statement. The second is sub-section (4), a self-reporting duty with a ten-day fuse that runs from the moment the entity 'comes to know or discovers' an inaccuracy — an obligation that no notice triggers and that an entity can breach without ever hearing from the department. Sub-section (5) is the provision under which registration, record-keeping and KYC-style due diligence for crypto-asset users are prescribed. For the practitioner acting for an individual rather than an exchange, the point is simpler and more urgent: from AY 2026-27 the department receives transaction-level data on crypto-assets from the reporting entities, and a client's undisclosed dealing has a short life expectancy. The reason s.115BBI needs to be kept away from all of this is that the two sections look alike from a distance — both charge or concern thirty per cent, both were the product of recent Finance Acts, and their numbers are adjacent to the VDA provisions — but s.115BBI is a trusts and institutions provision about accumulated and misapplied income and it has no VDA content at all. Citing it in a crypto matter is a marker of an unread pleading. If it applies to you, the first step is this: Identify whether the client is a 'reporting entity, as prescribed' at all — the section itself does not define the class, so the answer is in the rules and notifications made under it, which the library holds separately.
Not a case. The section applies to any person being a reporting entity, as prescribed, in respect of a crypto-asset. The matter was decided on 2026-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. A prescribed reporting entity must furnish information in respect of a transaction of a crypto-asset in a statement, for such period, within such time, in such form and manner and to such income-tax authority as prescribed (sub-section (1)). Where the prescribed authority considers the statement defective it may intimate the defect and give thirty days from intimation, or such further period as allowed, to rectify it; if the defect is not rectified the Act applies as if the person had furnished inaccurate information in the statement (sub-section (2)). Where the statement has not been furnished within the specified time the authority may serve a notice requiring it within a period not exceeding thirty days from service (sub-section (3)). A person who comes to know or discovers any inaccuracy in the information provided must inform the authority within ten days and furnish the correct information in the prescribed manner (sub-section (4)). The Central Government may by rules prescribe registration of such persons with the prescribed authority, the nature of the information and the manner of maintaining it, and the due diligence to be carried out for identifying any crypto-asset user or owner (sub-section (5)). 'Crypto-asset' has the meaning assigned to it in sub-clause (d) of clause (47A) of section 2 (sub-section (6)). Separately and unrelatedly, s.115BBI charges at thirty per cent the 'specified income' of a person in receipt of income on behalf of a fund or institution under s.10(23C)(iv), (v), (vi) or (via) or a trust or institution under s.11, allowing no deduction for expenditure or allowance and no set off of any loss in computing it, 'specified income' being defined by the Explanation to cover excess accumulation, deemed income under the specified provisions, and income losing exemption through the specified violations.
Not a judicial route. Section 285BAA sits beside s.285BA, the statement of financial transactions, and copies its architecture: a bare statutory duty whose content is left to rules, a defect-and-cure mechanism, a compel-by-notice mechanism, and a deeming provision that converts an uncured defect into inaccurate information so that the existing penalty machinery can operate without a new penalty section. Two things are added for crypto that s.285BA does not need. The first is the self-correction duty in sub-section (4), which is necessary because crypto transaction data is reconstructed from systems the entity itself controls and errors surface after filing rather than at it. The second is the rule-making power in sub-section (5) over registration and due diligence for identifying users and owners, which is what allows an Indian reporting framework to be aligned with international crypto-asset reporting standards; without a statutory due-diligence power the entity would have no obligation to know who its users are. Section 115BBI belongs to an entirely different scheme — the taxation of charitable and religious entities under ss.11 to 13 and s.10(23C) — and the only connection with the VDA provisions is that the Finance Act 2022 inserted both it and s.115BBH with effect from 1 April 2023. In the words reproduced by the source cited on this page: "(6) In this section, "crypto-asset" shall have the meaning assigned to it in sub-clause (d) of clause (47A) of section 2."
It was decided by the CBDT Circulars & Instructions on 2026-04-01 and is reported as Income-tax Act 1961, s.285BAA; inserted after s.285BA by the Finance Act 2025, w.e.f. 1-4-2026. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 285BAA, section 2(47A), section 115BBI, section 285BA, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. A prescribed reporting entity must furnish information in respect of a transaction of a crypto-asset in a statement, for such period, within such time, in such form and manner and to such income-tax authority as prescribed (sub-section (1)). Where the prescribed authority considers the statement defective it may intimate the defect and give thirty days from intimation, or such further period as allowed, to rectify it; if the defect is not rectified the Act applies as if the person had furnished inaccurate information in the statement (sub-section (2)). Where the statement has not been furnished within the specified time the authority may serve a notice requiring it within a period not exceeding thirty days from service (sub-section (3)). A person who comes to know or discovers any inaccuracy in the information provided must inform the authority within ten days and furnish the correct information in the prescribed manner (sub-section (4)). The Central Government may by rules prescribe registration of such persons with the prescribed authority, the nature of the information and the manner of maintaining it, and the due diligence to be carried out for identifying any crypto-asset user or owner (sub-section (5)). 'Crypto-asset' has the meaning assigned to it in sub-clause (d) of clause (47A) of section 2 (sub-section (6)). Separately and unrelatedly, s.115BBI charges at thirty per cent the 'specified income' of a person in receipt of income on behalf of a fund or institution under s.10(23C)(iv), (v), (vi) or (via) or a trust or institution under s.11, allowing no deduction for expenditure or allowance and no set off of any loss in computing it, 'specified income' being defined by the Explanation to cover excess accumulation, deemed income under the specified provisions, and income losing exemption through the specified violations. It arises in Crypto & Virtual Digital Assets, Charitable Trusts & Exemption and Assessment & Scrutiny matters, on section 285BAA, section 2(47A), section 115BBI, section 285BA of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Diarise sub-section (4) as a standing obligation: ten days from discovering an inaccuracy, whether or not anyone has asked. Treat a defect intimation under sub-section (2) as urgent — thirty days, extendable, and the consequence of missing it is that the Act treats the statement as carrying inaccurate information. If no statement has been filed and a notice comes under sub-section (3), note that the authority sets the period and it cannot exceed thirty days from service. Check the rules made under sub-section (5) for registration with the prescribed authority, the records to be maintained, and the due diligence required to identify crypto-asset users and owners, and build the client's onboarding around them. For an individual client, assume from AY 2026-27 that crypto transactions are visible to the department through this channel and advise disclosure accordingly, using s.139(8A) while it is still available. Never cite s.115BBI in a virtual digital asset matter; if the department cites it, point out that it charges the specified income of s.10(23C) and s.11 entities and has no application.
Still good law. Inserted by the Finance Act 2025 with effect from 1 April 2026 and therefore in force at the date of this entry. The text was read on a Department page carrying a Year stamp of 2025, on which the section is still introduced in the future tense ('shall be inserted ... w.e.f. 1-4-2026'), so it is the text as enacted; I did not locate a Year-2026 page and cannot confirm that it has not since been amended. I did not read the rules, notification or guidance note made under it on this pass, and the class of 'reporting entity' therefore remains to be checked against those. Section 115BBI was read on the Department's Year-2022 and Year-2025 pages and the operative text is identical on both. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Statutory entry. 'tier' is 'cbdt' because the library's tier vocabulary has no value for a statutory entry. 'decided_on' is the date the section takes effect, 1 April 2026, which is read from the editorial line printed above the section on the Department's own page: 'Following section 285BAA shall be inserted after section 285BA by the Finance Act, 2025, w.e.f. 1-4-2026:'. Because that line is written in the future tense on a page carrying a Year stamp of 2025, the section as printed is the section as enacted rather than as later amended, and a later pass should re-read it against a Year-2026 page. The definition of 'crypto-asset' is not set out here: sub-section (6) takes it from sub-clause (d) of s.2(47A), and I could NOT read that sub-clause on this pass because the Department's Year-2025 s.2 page truncated on every fetch — see the separate s.2(47A) entry. Section 115BBI was read in full on the Department's Year-2022 and Year-2025 pages and is included here only to keep it distinct; the Year-2023 page for s.115BBH carries footnote 80 recording that ss.115BBH and 115BBI were both inserted by the Finance Act 2022 w.e.f. 1-4-2023, which is the only thing the two sections have in common. I did NOT re-read the CBDT notification or guidance note on crypto-asset reporting on this pass; the library holds both as separate entries. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A prescribed reporting entity must furnish information in respect of a transaction of a crypto-asset in a statement, for such period, within such time, in such form and manner and to such income-tax authority as prescribed (sub-section (1)). Where the prescribed authority considers the statement defective it may intimate the defect and give thirty days from intimation, or such further period as allowed, to rectify it; if the defect is not rectified the Act applies as if the person had furnished inaccurate information in the statement (sub-section (2)). Where the statement has not been furnished within the specified time the authority may serve a notice requiring it within a period not exceeding thirty days from service (sub-section (3)). A person who comes to know or discovers any inaccuracy in the information provided must inform the authority within ten days and furnish the correct information in the prescribed manner (sub-section (4)). The Central Government may by rules prescribe registration of such persons with the prescribed authority, the nature of the information and the manner of maintaining it, and the due diligence to be carried out for identifying any crypto-asset user or owner (sub-section (5)). 'Crypto-asset' has the meaning assigned to it in sub-clause (d) of clause (47A) of section 2 (sub-section (6)). Separately and unrelatedly, s.115BBI charges at thirty per cent the 'specified income' of a person in receipt of income on behalf of a fund or institution under s.10(23C)(iv), (v), (vi) or (via) or a trust or institution under s.11, allowing no deduction for expenditure or allowance and no set off of any loss in computing it, 'specified income' being defined by the Explanation to cover excess accumulation, deemed income under the specified provisions, and income losing exemption through the specified violations.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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