Budget 2025: The Finance Minister has announced that now assessment for search cases will include virtual digital assests (VDA) which includes crypto, non-fungible tokens (NFT), and others

Income tax rules for search cases to apply to crypto income for up to 6 previous assessment years from February 1, 2025 This assessment after an income tax search procedure can go back up to six assessment years

Now assessment for search cases can be undertaken by the Income Tax Department for undisclosed virtual digital asset (VDA) for up to six assessment years preceding the year in which search was conducted. In section 158B of the Income-tax Act, in clause (b), after the words “money, bullion, jewellery” at both the places where they occur, the words “, virtual digital asset” shall be inserted and shall be deemed to have been inserted with effect from the 1st February, 2025.

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The Finance Minister has announced that now under Section 158A of the Income Tax Act, 1961 virtual digital asset (VDA) are to be included.

The Finance Minister said during Budget 2025 speech: "Amendments proposed in provisions of Block assessment for search and requisition cases under Chapter XIV-B

It is proposed to add the term “virtual digital asset” to the said definition of undisclosed income of the block period. The time-limit for completion of block assessment is proposed to be made as twelve months from end of the quarter in which the last of the authorisations for search or requisition has been executed.

Vide Finance (No. 2) Act, 2024, the concept of block assessment was introduced by amending provisions of Chapter XIV-B (sections 158B to 158BI of the Act) to be made applicable where a search under section 132 of the Act is initiated or requisition under section 132A of the Act is made, on or after 01st September, 2024.

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What is undisclosed income for the purpose of Income Tax Act?

Section 158B of the Act defines “undisclosed income” for the purposes of Chapter XIV-B. It is proposed to add the term “virtual digital asset” to the said definition. 3. Sub-section (2) and sub-section (3) of section 158BA of the Act provide that any assessment or reassessment or recomputation or a reference or an order pertaining to any assessment year falling in the block period pending on the date of initiation of the search or making of requisition, shall abate. Further, sub-section (5) of the said section provides that if any proceeding initiated under Chapter XIVB has been annulled in appeal or any other legal proceeding, then, the assessment or reassessment relating to any assessment year which has abated under sub-section (2) or sub-section (3), shall revive. It is proposed to align the said sub-sections by adding the words “recomputation”, “reference” or “order” in sub-section (5) of the said section

This story originally appeared on: India Times - Author:Faqs of Insurances