New Delhi: The government has introduced new legal measures to track and investigate digital assets under the proposed Income Tax Bill, 2025. Additionally, the parliament was made aware of WhatsApp’s assistance to the government in supplying proof of hidden cryptocurrency holdings of Rs 200 crore.
The move aims to strengthen the legal framework for probing digital transactions, which was previously lacking under the existing Income Tax Act, Finance Minister Nirmala Sitharaman announced on 25 March in Lok Sabha.
While addressing the Lok Sabha during discussions on the Finance Bill, Sitharaman highlighted the necessity of incorporating digital scrutiny into tax laws. “Income Tax Law did not give legal backing to check digital assets, so we have included it. The law should provide legal backing for checking digital elements in the Income Tax Act,” she stated.
The Finance Minister further underscored the increasing role of digital forensics in exposing undisclosed wealth. She revealed that encrypted messages on mobile phones led authorities to unearth Rs 250 crore in unaccounted money.
Additionally, WhatsApp messages provided evidence of concealed cryptocurrency holdings worth Rs 200 crore. Tax authorities also leveraged Google Maps history to track cash stash locations and examined Instagram activity to identify benami property ownership.
The proposed legislation aligns tax enforcement with technological advancements, ensuring that virtual digital assets, including cryptocurrencies, do not escape scrutiny. Under the new framework, tax officials will be empowered to access encrypted communications, digital exchanges and cloud storage if they suspect tax evasion or undeclared cryptocurrency holdings.
Finance Minister Sitharaman emphasized that digital evidence collection is critical for proving tax evasion in court and accurately computing evaded tax amounts.
The Income Tax Bill 2025 expands the powers of tax officials, particularly in search and seizure operations related to digital and electronic data. As per reports, Section 247 of the bill extends tax scrutiny beyond traditional paper documents and physical premises, granting officials the authority to investigate digital assets comprehensively.
A key change in the proposed law is the removal of bureaucratic hurdles in accessing digital data. Previously, tax officials required separate approvals to retrieve digital records. The new provisions allow them to bypass passwords and security codes, enabling direct access to crucial information.
This enhancement is expected to streamline investigations and bolster enforcement against digital tax evasion.
Another significant amendment concerns the attachment of property. Under the current system, tax officials must issue a separate notice before seizing assets.
The new bill, however, grants them the power to attach properties immediately during a search, without prior notification. The attachment can remain in place for up to six months, preventing the owner from selling or transferring the asset during this period.
The Income Tax Bill, 2025 is currently under review by a select parliamentary committee, which will consult stakeholders before finalizing the legislation. The proposed measures mark a substantial shift in tax enforcement, integrating digital tracking tools to curb tax evasion effectively.
Also read –
New Income Tax Bill 2025: Key Changes, ‘Tax Year’ Overhaul and Expert Takeaways
