Soon IT Officials can put your Digital Assets under scanner

New Delhi: The government has proposed to strengthen legal provisions to track digital assets under the new Income Tax Bill, 2025, as the previous Income Tax Act did not provide adequate legal backing for investigating digital assets, prompting the government to introduce specific measures in the proposed legislation, Finance Minister Nirmala Sitharaman said on March 25.

“Income Tax Law did not give legal backing to check digital assets, so have included it. Added checking of digital elements in the Income Tax Act, Law should give legal backing,” Sitharaman said while replying to the discussion on the Finance Bill in the Lok Sabha.

The move aligns tax enforcement with technological advancements, ensuring that virtual digital assets such as cryptocurrencies do not escape scrutiny. The new bill allows officials to access communication platforms like emails, WhatsApp, and Telegram, as well as enterprise software and storage servers used by businesses to conceal financial transactions. Gathering evidence from digital accounts is not only essential to prove tax evasion before a court of law, but also for computing the exact amount of tax evaded, the Finance Minister said.

Under the new framework, tax officials will be permitted to access encrypted communications, cloud storage, and digital asset exchanges if they have reason to believe that a person has concealed taxable income or cryptocurrency holdings.

The Income Tax Bill, 2025, is currently under review by a select committee of Parliament, which will hold discussions with stakeholders before finalising the legislation. The bill seeks to replace the six-decade-old Income Tax Act, 1961,