The government has proposed new legal provisions to track and investigate digital assets under the Income Tax Bill, 2025. The existing Income Tax Act lacked adequate legal backing for probing digital transactions, prompting the government to introduce specific measures, Finance Minister Nirmala Sitharaman announced on March 25.
While addressing the Lok Sabha during discussions on the Finance Bill, the Finance Minister stated, “Income Tax Law did not give legal backing to check digital assets, so we have included it. Added checking of digital elements in the Income Tax Act; the law should give legal backing.” She further emphasized the growing role of digital forensics in uncovering unaccounted wealth, noting that “encrypted messages on mobile phones led to unearthing Rs 250 crore unaccounted money. Evidence from WhatsApp messages of crypto assets has been detected. WhatsApp communication helped unearth Rs 200 crore unaccounted money,” she elaborated, adding that authorities have utilized Google Maps history to track locations where cash was hidden and examined Instagram accounts to establish benami property ownership.
The proposed bill aligns tax enforcement with technological advancements, ensuring that virtual digital assets, including cryptocurrencies, do not escape scrutiny. The legislation will empower tax officials to access communication platforms such as emails, WhatsApp, and Telegram, along with enterprise software and cloud storage used for financial concealment. Sitharaman stressed that gathering digital evidence is essential for proving tax evasion in court and accurately computing evaded tax amounts.