Government Strengthens Legal Provisions to Track Digital Assets Under New Income Tax Bill 2025

The Indian government has introduced enhanced legal provisions in the Income Tax Bill, 2025 to improve the tracking of digital assets, including cryptocurrencies. The move comes as the previous Income Tax Act lacked sufficient legal backing to investigate digital transactions, Finance Minister Nirmala Sitharaman stated in the Lok Sabha on March 25.

Key Highlights of the New Provisions

• Legal Backing for Digital Asset Investigations: The bill introduces explicit measures to scrutinize virtual assets and prevent tax evasion through digital transactions.

• Digital Forensics in Tax Evasion Cases: Officials can now use encrypted messages, mobile data, cloud storage, and social media accounts to trace unaccounted wealth.

• Crypto Asset Tracking: The government aims to ensure that cryptocurrency transactions do not escape taxation by allowing tax officials access to digital exchanges and encrypted communications.

Finance Minister’s Statement

Sitharaman emphasized that digital evidence has already played a crucial role in uncovering hidden wealth.

• WhatsApp messages helped authorities detect Rs 200 crore of unaccounted money.

• Encrypted mobile messages led to the discovery of Rs 250 crore in undisclosed assets.

• Google Maps history was used to track cash storage locations.

• Instagram accounts helped officials uncover benami properties.

Strengthening Tax Enforcement with Technology

The Income Tax Bill, 2025 aligns tax enforcement with technological advancements by allowing officials to investigate:

• WhatsApp, Telegram, and email communications used for financial transactions.

• Cloud storage and enterprise software used to conceal income.

• Crypto exchanges and digital wallets where assets may be hidden.

Under the new law, tax officials will have the authority to access digital platforms when they suspect tax evasion or concealed cryptocurrency holdings. The changes ensure that virtual digital assets are no longer outside the tax radar.