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Rule 244: Due diligence on crypto-asset users and self-certification

Rule 244 explains how a reporting crypto-asset service provider finds out which crypto-asset users are reportable users. The core tool is a self-certification of tax residence, checked against the information the provider already holds, including its Anti Money Laundering or Know Your Customer records. The rule covers individual and entity users, the controlling persons of entities, what a valid self-certification must contain, what to do when circumstances change, reliance on third parties, and keeping records for at least seven tax years.

Official notified Income-tax Rules, 2026

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Rule 244 - Due diligence procedures under section 509

(1) A crypto-asset user is treated as a reportable user beginning as of the date it is identified as such, pursuant to the due diligence procedures specified in this rule.

(2) The following procedures shall apply for the purposes of determining whether the individual crypto-asset user is a reportable user:–

(a) when establishing the relationship with the individual crypto-asset user, or with respect to pre-existing individual crypto-asset users within twelve months on and from the 1st January, 2026, the reporting crypto-asset service provider shall––

(i) obtain a self-certification that allows the reporting crypto-asset service provider to determine the residence(s) of individual crypto-asset users for tax purposes; and

(ii) confirm the reasonableness of such self-certification based on the information obtained by the reporting crypto-asset service provider, including any documentation collected pursuant to Anti Money Laundering or Know Your Customer Procedures;

(b) if at any point there is a change of circumstances with respect to an individual crypto-asset user that causes the reporting crypto-asset service provider to know, or have reason to know, that the original self-certification is incorrect or unreliable, then the reporting crypto-asset service provider––

(i) shall not rely on the original self-certification;

(ii) shall obtain a valid self-certification, or a reasonable explanation; and

(iii) the documentation supporting the validity of the original self-certification, as may be appropriate.

(3) For the purposes of determining whether––

(a) the entity crypto-asset user is a reportable user; or

(b) an entity, other than an excluded person or an active entity, with one or more controlling persons who are the reportable persons, the following procedures shall apply:––

(i) when establishing the relationship with the entity crypto-asset user, or with respect to pre-existing entity crypto-assets users within twelve months on and from the 1st January, 2025, the reporting crypto-asset service provider shall––

(A) obtain a self-certification that allows the reporting crypto-asset service provider to determine the residence(s) of the entity crypto-asset user for tax purposes; and

(B) confirm the reasonableness of such self-certification based on the information obtained by the reporting crypto-asset service provider, including any documentation collected pursuant to Anti Money Laundering or Know Your Customer Procedures;

(ii) if the entity crypto-asset user certifies that it has no residence for tax purposes, the reporting crypto-asset service provider shall rely on the place of effective management or on the address of the principal office to determine the residence of the entity crypto-asset user; and

(iii) if the self-certification indicates that the entity crypto-asset user is resident in a country or territory outside India, the reporting crypto-asset service provider shall treat the entity crypto-asset user as a reportable user, unless it reasonably determines based on the self-certification or on information in its possession or that is publicly available, that the entity crypto-asset user is an excluded person.

(4) With respect to an entity crypto-asset user, other than an excluded person, the reporting crypto-asset service provider shall determine whether it has one or more controlling persons who are reportable persons, unless it determines that the entity crypto-asset user is an active entity, based on a self-certification from the entity crypto-asset user.

(5) For the purposes of determining the controlling persons of the entity crypto-asset user,––

(a) a reporting crypto-asset service provider may rely on the information collected and maintained pursuant to Anti Money Laundering or Know Your Customer Procedures, provided that such procedures are consistent with the 2012 Financial Action Task Force Recommendations, as updated in June, 2019 pertaining to virtual asset service providers and as further updated from time to time; and

(b) where the reporting crypto-asset service provider is not legally required to apply the Anti Money Laundering or Know Your Customer Procedures, that are consistent with the 2012 Financial Action Task Force Recommendations, as updated in June, 2019 pertaining to virtual asset service providers, it shall apply substantially similar procedures for the purposes of determining the controlling persons.

(6) For the purposes of determining whether a controlling person is a reportable person, a reporting crypto-asset service provider shall rely on a self-certification from the entity crypto-asset user or such controlling person that allows the reporting crypto-asset service provider to determine the residence(s) of the controlling person for tax purposes and confirm the reasonableness of such self-certification based on the information obtained by the reporting crypto-asset service provider, including any documentation collected pursuant to the Anti Money Laundering or Know Your Customer Procedures.

(7) If at any point, there is a change of circumstances with respect to an entity crypto-asset user or its controlling persons that causes the reporting crypto-asset service provider to know, or have reason to know, that the original self-certification is incorrect or unreliable, then the reporting crypto-asset service provider––

(a) shall not rely on the original self-certification;

(b) shall obtain a valid self-certification, or a reasonable explanation; and

(c) the documentation supporting the validity of the original self-certification, as may be appropriate.

(8) A self-certification provided by an individual crypto-asset user or controlling person is valid only if it is signed or otherwise positively affirmed by the individual crypto-asset user or controlling person, it is dated at the latest at the date of receipt and it contains the following information with respect to the individual crypto-asset user or controlling person:

(a) first and last name;

(b) residence address;

(c) country(s) or territory(s) of residence for tax purposes;

(d) with respect to each reportable person, the TIN with respect to each country or territory outside India in which it is a resident for tax purposes; and

(e) date of birth.

(9) A self-certification provided by an entity crypto-asset user is valid only if it is signed or otherwise positively affirmed by the crypto-asset user, it is dated at the latest at the date of receipt and it contains the following information with respect to the entity crypto-asset user:

(a) legal name;

(b) address;

(c) country(s) or territory(s) of residence for tax purposes;

(d) with respect to each reportable person, the TIN with respect to each country or territory outside India in which it is a resident for tax purposes;

(e) in case of an entity crypto-asset user other than an active entity or an excluded person, the information specified in sub-rule (8) with respect to each controlling person of the entity crypto-asset user, unless such controlling person has provided a self-certification pursuant to the said sub-rule, as well as the role(s) by virtue of which each reportable person is a controlling person of the entity, if not already determined on the basis of the Anti Money Laundering or Know Your Customer Procedures; and

(f) if applicable, the information as to the criteria it meets to be treated as an active entity or excluded person.

(10) Irrespective of anything contained in sub-rules (8) and (9), the TIN is not required to be collected––

(a) if the country or territory of residence of the reportable person does not issue a TIN to the reportable person; or

(b) the domestic law of the relevant country or territory outside India does not require the collection of the TIN issued by such country or territory.

(11) A reporting crypto-asset service provider may rely on a third party to fulfil the due diligence obligations set out in this rule, but such obligations remain the responsibility of the reporting crypto-asset service provider.

(12) A reporting crypto-asset service provider shall maintain all documentation and data for a period of not less than seven tax years after the end of the period within which the reporting crypto-asset service provider shall report the information required to be reported pursuant to rule 243.

(13) (a) For the purposes of sub-rule (2),—

(i) where an individual is resident for tax purposes in two or more countries or territories outside India, all such country(s) or territory(s) of residence are to be declared in a self-certification and the reporting crypto-asset service provider shall treat the individual crypto-asset user as a reportable user in respect of each such country or territory outside India;

(ii) a reporting crypto-asset service provider is considered to have confirmed the "reasonableness" of a self-certification if, in the course of establishing a relationship with an individual crypto-asset user and upon review of the information obtained in connection with the establishment of the relationship (including any documentation collected pursuant to the Anti Money Laundering or Know Your Customer Procedures), it does not know or have reason to know that the self-certification is incorrect or unreliable;

(iii) where the self-certification fails the reasonableness test referred to in sub-clause (ii), the reporting crypto-asset service provider shall obtain either a valid self-certification, or a reasonable explanation and documentation (as appropriate) supporting the reasonableness of the self-certification, and retain a copy or a notation of such explanation and documentation before providing services effectuating relevant transactions to the individual crypto-asset user;

(iv) for the purposes of sub-rule (2)(b), a reporting crypto-asset service provider is said to have reason to know that a self-certification is unreliable or incorrect, if its knowledge of relevant facts or statements contained in the self-certification or other documentation is such that a reasonably prudent person in the position of the reporting crypto-asset service provider would question the claim being made;

(v) a reporting crypto-asset service provider also has reason to know that a self-certification is unreliable or incorrect, if there is information in the documentation or in the files of the reporting crypto-asset service provider that conflicts with the claim of the person regarding its status;

(vi) a reporting crypto-asset service provider has reason to know that a self-certification provided by a person is unreliable or incorrect, if the self-certification is incomplete with respect to any item on the self-certification that is relevant to the claims made by the person, the self-certification contains any information that is inconsistent with the claim of the person, or the reporting crypto-asset service provider has other information that is inconsistent with the claim of the person;

(vii) a reporting crypto-asset service provider that relies on a service provider to review and maintain a self-certification is considered to know or have reason to know the facts within the knowledge of the service provider;

(viii) a reporting crypto-asset service provider may not rely on documentation provided by a person, if the documentation does not reasonably establish the identity of the person presenting the documentation;

(ix) a reporting crypto-asset service provider may not rely on documentation, if the documentation contains information that is inconsistent with the claim of the person as to its status, the reporting crypto-asset service provider has other information that is inconsistent with the status of the person, or the documentation lacks information necessary to establish the status of the person;

(x) the expression "change of circumstances" includes any change that results in the addition of information relevant to the status of an individual crypto-asset user or otherwise conflicts with the status of such user, or any change or addition of information to any profile associated with such individual crypto-asset user, if such change or addition of information affects the status of the individual crypto-asset user;

(xi) a change of circumstances affecting the self-certification provided to the reporting crypto-asset service provider will terminate the validity of the self-certification with respect to the information that is no longer reliable, until the information is updated;

(xii) where a change of circumstances occurs, the reporting crypto-asset service provider shall not rely on the original self-certification and shall obtain either—

(A) a valid self-certification that establishes the residence(s) for tax purposes of the individual crypto-asset user; or

(B) a reasonable explanation and documentation supporting the validity of the original self-certification (and retain a copy or a notation of such explanation and documentation);

(xiii) a self-certification shall become invalid on the date the reporting crypto-asset service provider holding the self-certification knows or has reason to know that the circumstances affecting the correctness of the self-certification have changed;

(xiv) a reporting crypto-asset service provider may choose to treat a person as having the same status that it had prior to the change in circumstances until the earlier of ninety calendar days from the date that the self-certification became invalid due to the change in circumstances, the date that the validity of the self-certification is confirmed, or the date that a new self-certification is obtained;

(xv) where a reporting crypto-asset service provider cannot obtain a confirmation of the validity of the original self-certification or a valid self-certification during such ninety-day period, the reporting crypto-asset service provider shall treat the individual crypto-asset user as resident of the country(s) or territory(s) in which the individual crypto-asset user claimed to be resident in the original self-certification and the country(s) or territory(s) in which the individual crypto-asset user may be resident as a result of the change in circumstances;

(xvi) a reporting crypto-asset service provider may rely on a self-certification without having to inquire into possible changes of circumstances that may affect the validity of the statement, unless it knows or has reason to know that the circumstances have changed;

(xvii) a reporting crypto-asset service provider may retain an original, certified copy, or photocopy (including a microfiche, electronic scan or similar means of electronic storage) or electronic copy of the self-certification;

(xviii) a reporting crypto-asset service provider may treat a self-certification as valid, irrespective of whether the self-certification contains an inconsequential error, if the reporting crypto-asset service provider has sufficient documentation on file to supplement the information missing from the self-certification due to the error and the documentation relied upon to cure the inconsequential error shall be conclusive.

(b) For the purposes of sub-rule (3),—

(i) "publicly available" information includes information published by an authorised government body of a country or territory, such as––

(A) information in a list published by a tax administration; or

(B) information in a publicly accessible register maintained or authorised by an authorised government body of such country or territory; or

(C) information disclosed on an established securities market;

(ii) if an entity is subject to tax as a resident in more than one country or territory outside India, all country(s) or territory(s) of residence are to be declared in a self-certification and the reporting crypto-asset service provider shall treat the entity crypto-asset user as a reportable user in respect of each such country or territory outside India;

(iii) reporting crypto-asset service provider is considered to have confirmed the "reasonableness" of a self-certification if, in the course of establishing a relationship with the entity crypto-asset user and upon review of the information obtained in connection with the establishment of the relationship (including any documentation collected pursuant to the Anti Money Laundering or Know Your Customer Procedures), it does not know or have reason to know that the self-certification is incorrect or unreliable;

(iv) in case a self-certification fails the reasonableness test, the reporting crypto-asset service provider shall obtain either–

(A) a valid self-certification; or

(B) a reasonable explanation and documentation supporting the reasonableness of the self-certification before providing services effecting relevant transactions to the entity crypto-asset user.

(c) For the purposes of sub-rules (8) and (9), a self-certification may be signed (or otherwise positively affirmed) by any person authorised to sign on behalf of the individual crypto-asset user or controlling person under domestic law.

(d) For the purposes of sub-rule (11), the following situations apply in which reporting crypto-asset service provider shall rely on documentation of a third party to fulfil its due diligence obligations:––

(i) with respect to documentation collected by third party service providers, agents or where a reporting crypto-asset service provider relies on documentation of an acquired business; and

(ii) with respect to the situation, where a reporting crypto-asset service provider relies on other reporting crypto-asset service providers that handle the same relevant transaction.

(14) For the purposes of rules 241, 242, 243 and this rule, exchange of any information in respect of any transaction in relevant crypto-asset shall be only for the limited purposes of administration of taxes by the relevant jurisdiction.

Rule breakdown

Individual users: Rule 244(1) and (2)

A user is treated as a reportable user from the date it is identified as such under these procedures.

When establishing the relationship, or within twelve months on and from 1 January 2026 for pre-existing individual users, the provider must obtain a self-certification of tax residence and confirm its reasonableness against its information, including AML/KYC documentation.

If a change of circumstances causes the provider to know, or have reason to know, that the self-certification is incorrect or unreliable, it must stop relying on it and obtain a valid self-certification or a reasonable explanation, with supporting documentation as appropriate.

Entity users and controlling persons: Rule 244(3) to (7)

For entity users, the provider obtains and checks a self-certification in the same way. If the entity certifies that it has no tax residence, the provider relies on its place of effective management or principal office address.

An entity user resident outside India is treated as a reportable user unless the provider reasonably determines, from the self-certification, its own information or publicly available information, that it is an excluded person.

For an entity user that is not an excluded person, the provider must determine whether it has controlling persons who are reportable persons, unless a self-certification shows it is an active entity. AML/KYC information may be relied on if consistent with the 2012 FATF Recommendations (as updated); otherwise substantially similar procedures apply.

A controlling person's residence is decided on a self-certification from the entity or the controlling person, checked for reasonableness.

What a valid self-certification contains: Rule 244(8) to (10)

Individuals and controlling persons: first and last name, residence address, country or territory of tax residence, TIN for each country or territory outside India of residence of a reportable person, and date of birth.

Entities: legal name, address, country or territory of tax residence, TIN, details of each controlling person (for entities other than active entities or excluded persons) with their roles, and, if applicable, the criteria met for active entity or excluded person status.

It must be signed or otherwise positively affirmed and dated at the latest at the date of receipt. A person authorised under domestic law may sign for an individual user or controlling person.

A TIN need not be collected where the country or territory does not issue one, or its domestic law does not require it to be collected.

Third parties, records and the detailed tests: Rule 244(11) to (14)

A provider may rely on a third party for due diligence, but the obligations remain its own. Sub-rule (13)(d) covers documentation collected by third-party service providers or agents, documentation of an acquired business, and other reporting crypto-asset service providers that handle the same relevant transaction.

All documentation and data must be kept for not less than seven tax years after the end of the period within which the information must be reported under Rule 243.

Sub-rule (13)(a) applies for the purposes of sub-rule (2), that is, to individual crypto-asset users. It explains reasonableness, "reason to know" and change of circumstances. A self-certification becomes invalid on the date the provider knows or has reason to know that the circumstances have changed. The provider may keep treating the individual user as having the earlier status until the earliest of ninety calendar days from that date, the date the self-certification is confirmed as valid, or the date a new one is obtained. If it cannot get a confirmation or a valid self-certification within those ninety days, it treats the individual user as resident both in the countries claimed originally and in those where the user may be resident because of the change.

Sub-rule (13)(b) gives the corresponding reasonableness rules for entity users. It contains no ninety-day period: for entity users and controlling persons, sub-rule (7) simply requires the provider to stop relying on the original self-certification and obtain a valid one or a reasonable explanation.

Sub-rule (14) says information on transactions in relevant crypto-assets is exchanged only for the limited purposes of administration of taxes by the relevant jurisdiction.

Printed as in the gazette

Sub-rule (2)(a) gives pre-existing individual users twelve months on and from 1 January 2026, but sub-rule (3)(b)(i) gives pre-existing entity users twelve months "on and from the 1st January, 2025". The dates are reproduced exactly as printed. Check for any later correction before relying on the entity date.

Sub-rule (2)(b)(iii) and sub-rule (7)(c) read "the documentation supporting the validity of the original self-certification, as may be appropriate" without a verb, and sub-rule (3)(b)(i) reads "entity crypto-assets users". These are reproduced as printed.

Key takeaways

Self-certification first

Tax residence is established by a self-certification checked against AML/KYC information.

Look through entities

Controlling persons of entities that are not active entities or excluded persons must be checked.

Ninety days, individuals only

For an individual user, the earlier status may be kept for up to ninety calendar days from the date the self-certification became invalid. Entity users have no such window.

Seven tax years

Documentation and data are kept for at least seven tax years after the reporting period.

Practical checklist

  • Collect the self-certification when establishing the relationship and check it against KYC records before providing services.
  • For an individual user, diary ninety calendar days from the date the self-certification became invalid (the date you knew or had reason to know of the change), and resolve the status within that period.
  • For an entity user or controlling person, stop relying on the original self-certification as soon as you know or have reason to know it is incorrect or unreliable; sub-rule (7) gives no ninety-day period.
  • Keep copies or notations of every reasonable explanation and supporting document relied on.

Avoid

  • Do not rely on a self-certification once you know, or have reason to know, that it is incorrect or unreliable.
  • Do not rely on documents from an individual user that do not reasonably establish the identity of the person presenting them (Rule 244(13)(a)(viii)).

FAQs

When must pre-existing individual users be covered?

Within twelve months on and from 1 January 2026 (Rule 244(2)(a)).

What if the self-certification does not look reasonable?

The provider must obtain a valid self-certification, or a reasonable explanation and documentation supporting it, before providing services effecting relevant transactions to the user. For individual users it must also retain a copy or notation (Rule 244(13)(a)(iii) and (13)(b)(iv)).

Can a self-certification with a small error be accepted?

For an individual user, yes, if the error is inconsequential and the provider has sufficient documentation on file to supplement the missing information. That documentation is conclusive (Rule 244(13)(a)(xviii)).

Can a provider use another firm to do the checks?

Yes, but the due diligence obligations remain the responsibility of the reporting crypto-asset service provider (Rule 244(11)).

How long must records be kept?

For not less than seven tax years after the end of the period within which the information must be reported under Rule 243 (Rule 244(12)).

Glossary

Self-certification
A signed or positively affirmed declaration, dated at the latest at the date of receipt, containing the information listed in Rule 244(8) or (9).
Change of circumstances
For individual users, any change that adds information relevant to the user's status or conflicts with it, or any change or addition to a profile linked to the user that affects its status (Rule 244(13)(a)(x)).
Publicly available information
Includes information published by an authorised government body, such as a tax administration list, a public register or disclosures on an established securities market (Rule 244(13)(b)(i)).
Reasonableness
Confirmed if, on reviewing the information obtained when establishing the relationship, the provider does not know or have reason to know the self-certification is incorrect or unreliable (Rule 244(13)(a)(ii) for individual users; Rule 244(13)(b)(iii) for entity users).

Official sources

Related rules