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In an effort to further rein in misuse of crypto, government has proposed to include virtual digital asset (VDA) in the definition of undisclosed income for block assessment scheme. This means non-disclosure could lead to tax at 60 per cent besides penalty.
Once the Finance Bill 2025 is enacted, this provision will be made effective from February 1, 2025. The block assessment scheme is a procedure for assessing undisclosed income discovered during a search or requisition. The scheme was revised in July 2024 budget with an aim to streamline tax administration, reduce prolonged litigation, and improve the efficiency of handling search cases.
Section 158B(b) of the Income Tax Act provides an inclusive meaning of ‘undisclosed income’ for the block assessment scheme. It prescribes various assets to be considered undisclosed income if such assets represent, wholly or partly, income or property that has not been or would not have been disclosed in the income tax return. As on date, assets include money, bullion, jewellery, other valuable articles or things, and income based on any entry in books of account, other documents, and transactions.
