"Income Tax Law Did Not Give Legal Backing To Check Digital Assets, So Have Included It”: FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman said on March 25 that the government has proposed to strengthen legal provisions to track digital assets under the new Income Tax Bill, 2025.

"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. [Source: MoneyControl]

The Finance Minister added that digital forensics played a crucial role in unearthing unaccounted money.

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Digital Footprints Soon To Be Under Taxman's Scanner

"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," the Minister said.

"Collections in PIT (Personal Income Tax) have shown considerable buoyancy. FY26 direct tax collection is realistic, taking into account the dip due to tax relief," she said.

Sitharaman also noted that Google Maps history is often used to determine the locations frequently visited to hide cash, and Instagram accounts could be analysed to establish “benami” property ownership.

The new bill allows government 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 ascertaining the exact amount of tax evaded, Minister Sitharaman said.

With the new bill, IT officials can access encrypted communications, cloud storage, and digital asset exchanges if they believe that an individual has concealed taxable income or cryptocurrency holdings.

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