Rules 242 to 244 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rules 242, 243 and 244 give effect to section 509 of the Income-tax Act, 2025 on reporting of crypto-asset transactions. Rule 242 says which service providers are subject to the reporting and due diligence rules, rule 243 says what is reported and when, in Form 167, and rule 244 sets out the due diligence procedures. The Corrigendum G.S.R. 286(E) corrected two cross-references in rule 243(1), so that they read "rule 242" and "rule 244".
This article is written as per the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026. Later notifications should be checked before you act.
A reporting crypto-asset service provider that has a nexus with India listed in rule 242(1) reports under rule 243 and follows the due diligence of rule 244. Rule 243(1) opens "subject to the obligations of the reporting crypto-asset service provider under rule 242 and due diligence procedures under rule 244", after the corrigendum replaced "section 242" and "section 244". The statement, or a nil statement, is furnished in Form 167 by 31st May of the calendar year following the year to which the information relates (rule 243(7)).
What the corrigendum corrected
The Corrigendum to G.S.R. 198(E), published as G.S.R. 286(E), 16 April 2026, has seventy-six items. Items 3 and 4 concern rule 243.
| Item | As notified on 20 March 2026 | After the corrigendum |
|---|---|---|
| 3 | "subject to the obligations of the reporting crypto-asset service provider under section 242" | "... under rule 242" |
| 4 | "and due diligence procedures under section 244" | "... under rule 244" |
The rest of rule 243, and rules 242 and 244, are not touched by any amending notification in hand. The defined terms are in rule 241, covered in our post on crypto-asset definitions.
Rule 242: who is subject
A reporting crypto-asset service provider is subject to rules 243 and 244 if it is: an entity or individual resident for tax purposes in India; an entity incorporated or organised under the laws of India; an entity that has legal personality in India or an obligation to file a return of income under section 263; an entity managed from India; or an entity or individual with a regular place of business in India (sub-rule (1)). It is also subject for relevant transactions effected through a branch based in India (sub-rule (2)).
It need not complete the requirements in India (sub-rule (3)) where they are completed in a partner jurisdiction on a corresponding nexus, where it has lodged the specified notification with India confirming this, or for transactions through a branch in a partner jurisdiction that completes them there.
Platforms with users in several countries can place their reporting through our legal consultation page.
Rule 243: what is reported
For each relevant calendar year starting on or after the 1st January, 2026, the provider maintains and reports, for each crypto-asset user that is a reportable user or has controlling persons that are reportable persons:
| Item | Content |
|---|---|
| Identity | Name, address, country or territory of residence, TIN and, for an individual, date and place of birth; for an entity with a reportable controlling person, the entity's details and each such person's details and role |
| Provider | Name, address and Permanent Account Number of the reporting crypto-asset service provider |
| Per type of relevant crypto-asset | Full name of the type; amounts, units and number of transactions for acquisitions and disposals against fiat currency; fair market value, units and number for those against other crypto-assets; reportable retail payment transactions; transfers to and by the reportable user; and transfers to wallet addresses not known to belong to a virtual asset service provider or financial institution |
Further rules in the same rule:
- TIN and place of birth (sub-rules (2), (3)). A TIN is not reported if the country issues none or does not require its collection; place of birth is not reported unless domestic law requires the provider to obtain it.
- Currency and valuation (sub-rules (4), (8)). The fiat currency is identified; amounts are reported in Indian Rupee, net of transaction fees, converted at the telegraphic transfer buying rate at the time of each transaction. Fair market value follows a stated order of methods, and any alternative method used is indicated in Form 167.
- Wallet addresses (sub-rule (8)(d)). External wallet addresses are retained for not less than seven years; reporting them is not required.
- One statement per user (sub-rule (5)) and nil statement (sub-rule (6)). A statement is furnished in respect of each reportable user or reportable person; if none is identified after due diligence, a nil statement is furnished.
- Form and date (sub-rule (7)). Form 167, by the 31st of May of the calendar year following the year to which the information relates.
- Where to send it (sub-rules (9), (10)). To the Director or Joint Director of Income-tax (Intelligence and Criminal Investigation), by online transmission to a designated server under digital signature.
- Who signs (sub-rules (11), (12)). The designated director signs, verifies and furnishes the statement; for a non-resident provider, a holder of a valid power of attorney from the designated director may do so. The provider communicates the director's and the principal officer's details and obtains a number.
Rule 244: due diligence
| Subject | What the rule provides |
|---|---|
| Reportable user (sub-rule (1)) | Treated as reportable from the date identified under this rule |
| Individuals (sub-rule (2)) | On establishing the relationship, or for pre-existing users within twelve months on and from the 1st January, 2026, obtain a self-certification and confirm its reasonableness; on a change of circumstances, stop relying on it and obtain a valid one or a reasonable explanation |
| Entities (sub-rules (3), (4)) | A similar procedure, with residence determined by place of effective management or the principal office where no tax residence is certified; a user resident outside India is treated as reportable unless an excluded person; the provider determines whether controlling persons are reportable persons unless the entity is an active entity |
| Controlling persons (sub-rules (5), (6)) | May rely on anti-money laundering or know-your-customer information that follows the Financial Action Task Force recommendations the rule names |
| Valid self-certification (sub-rules (8), (9)) | Signed or positively affirmed, dated at latest on receipt, with name, address, residence for tax purposes, TIN and, for individuals, date of birth |
| Reliance and records (sub-rules (11), (12)) | A third party may be used, but the provider remains responsible; documentation is kept for not less than seven tax years after the period within which the information is to be reported |
| Details (sub-rule (13)) | Reasonableness and "reason to know" tests, and a ninety-day period after a change of circumstances |
| Exchange of information (sub-rule (14)) | For rules 241 to 244, only for the limited purposes of administration of taxes by the relevant jurisdiction |
The entity limb of sub-rule (3)(i) prints the date "1st January, 2025" for pre-existing entity users, whereas the individual limb prints 1st January, 2026; read the rule's text on this point.
An example
Zenith Digital Exchange Private Limited is incorporated under the laws of India, so rule 242(1)(b) applies. For a relevant calendar year starting on or after 1 January 2026 it collects a self-certification from Aarav Kapoor, an individual whose self-certification shows tax residence in another country, and treats him as a reportable user. It reports the aggregate amounts and units for each type of crypto-asset he traded, in Indian Rupee, and furnishes Form 167 by 31st May of the next calendar year, signed by its designated director.
The section of the Act behind the rules
Rules 243 and 244 are headed under section 509. Our article on sections 509 and 510, reporting of crypto-asset transactions and the annual information statement explains the section.
Need help with crypto-asset reporting?
For a platform, the practical work is in matching data to the rule's categories and preparing a clean annual statement. We can help you plan it through our tax planning advisory service.
Key takeaways
- Rule 242 decides who is subject; rule 243 what is reported; rule 244 how users are identified.
- Corrigendum items 3 and 4 correct "section" to "rule" in rule 243(1).
- Form 167, including a nil statement, is due by 31st May of the next calendar year.
- Records are kept for not less than seven years in the cases the rules name.
Read next
- Rule 241: crypto-asset definitions
- Rule 245: the Annual Information Statement
- Rule 237: statement of financial transaction
- Sections 509 and 510: reporting of crypto-asset transactions
- Rule 239: information to be reported for reportable accounts
Disclaimer: Based on the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026, as consulted on 2 October 2026. It explains the words of the rules and forms only; later notifications, the forms and utilities on the e-filing portal, circulars and the way the tax authorities apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.