Income Tax Rules 1962 amended:
Banks to collect more details from account holders; here’s what you may need to disclose
Mar 23, 2026
What has been amended in Income Tax rules 1962?
The government has revised Income Tax Rules, 1962, making it mandatory for banks and financial institutions to collect more detailed information about account holders. These updates are part of a worldwide push for tax transparency. The new rules mainly affect how banks report financial data, especially for accounts linked to foreign tax residents, but Indian residents will also need to share additional details.
Financial institutions to provide additional information regarding reportable accounts
Banks now need to gather extra information about your account. This includes whether you’ve submitted a valid self-declaration, whether your account is joint, and how many people hold it. They must also classify accounts as new or existing and identify people who control entity accounts, adding another layer of financial transparency.
New reporting rules under Income Tax Act 1962 explained
Financial institutions must now report proceeds from the sale or redemption of financial assets if they act as brokers or custodians. They also need to collect key details like your Taxpayer Identification Number (TIN) and date of birth, especially when updating older accounts, in line with anti-money laundering (PMLA) requirements.
Impact of updated Income Tax rules 1962 on High-net-worth individuals
For high-net-worth individuals (HNIs), these rules bring greater scrutiny. Earlier, banks only reported someone as a “controlling person.” Now, they must specify how that control exists. This could expose complex structures like offshore trusts and family offices, increasing transparency around wealth and ownership.
Indirect impact on regular individuals
Even though these rules target banks, individuals may feel the impact. You may need to provide additional details like tax residency, TIN, and other identification information. The changes also increase visibility of your financial activities, including joint accounts and digital assets, leading to tighter tax monitoring.
Crypto and digital assets now covered
The rules now include crypto assets as part of financial reporting. This means investments in cryptocurrencies, derivatives, or digital assets may be tracked. However, if crypto transactions are already reported under a separate framework (CARF), banks may not need to report them again, avoiding duplication.
Why these changes were introduced
These updates align India with global standards like FATCA and CRS, which aim to prevent tax evasion. With the rise of digital assets and cross-border investments, the government wants better tracking of financial activities. The goal is to improve transparency and ensure taxes are properly reported worldwide.
[The Economic Times]
