TAXMAN GOES DIGITAL: Your Digital Footprints Under Scanner In Proposed New Tax Bill

New Delhi (The Uttam Hindu): The Indian government has introduced a new Income Tax Bill, 2025, aimed at strengthening legal provisions to track digital assets, according to Finance Minister Nirmala Sitharaman. The move seeks to align tax enforcement with technological advancements, ensuring virtual digital assets like cryptocurrencies don't escape scrutiny.

The proposed legislation addresses the inadequacies of the previous Income Tax Act which lacked legal backing for investigating digital assets. Sitharaman emphasized the importance of digital forensics in uncovering unaccounted money, citing instances where encrypted messages and WhatsApp communications helped uncover ₹250 crore and ₹200 crore in unaccounted money, respectively.

Key Provisions of the New Bill:

Access to Digital Communication: Officials can access emails, WhatsApp, Telegram and enterprise software to track financial transactions.

Encryption and Cloud Storage: Tax officials can access encrypted communications, cloud storage and digital asset exchanges with reasonable suspicion of concealed income or cryptocurrency holdings.

Digital Asset Exchanges: The bill aims to regulate digital asset exchanges to prevent tax evasion.

The Income Tax Bill, 2025, is currently under review by a parliamentary select committee. Once finalized, it will replace the six-decade-old Income Tax Act, 1961, with a simplified framework to enhance compliance and address evolving tax challenges in the digital age.