The Indian government has introduced stronger legal provisions in the Income Tax Bill 2025 to track digital assets, as the Income Tax Act of 1961 did not provide sufficient legal backing for investigating them.
Finance Minister Nirmala Sitharaman stated that new measures were necessary to address digital elements in tax enforcement.
Under the new framework, tax officials can access encrypted messages, cloud storage, and digital asset exchanges if they suspect hidden taxable income or cryptocurrency holdings.
FM Sitharaman highlighted how digital forensics helped uncover unaccounted money, including ₹250 crore through encrypted mobile messages and ₹200 crore via WhatsApp chats. Authorities have also used Google Maps history and Instagram activity to track hidden assets.
The bill allows officials to examine emails, WhatsApp, Telegram, and business storage systems to detect tax evasion. FM Sitharaman emphasized that gathering digital evidence is essential to proving financial fraud in court.
The Lok Sabha passed the Finance Bill 2025 on March 25, including 35 amendments. It now awaits approval from the Rajya Sabha. The bill aligns tax enforcement with modern technology to ensure digital assets like cryptocurrency are properly monitored.
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