Sections 158B and 113: Undisclosed Crypto

Finance Act 2025 inserted virtual digital assets into the definition of undisclosed income in Section 158B. Crypto found during a search is then assessed across the whole block period, and Section 113 taxes that income at 60% with surcharge on top.

Key highlights

The harshest rung on the ladder, and the narrowest.

60%

Rate on block period undisclosed income

Section 113

Block

Assessed across the period, not one year

Section 158B

Found

It applies to what a search discovers

Not to ordinary trading

What Finance Act 2025 Changed

Virtual digital assets are now named in the definition of undisclosed income. Before that, bringing crypto into a block assessment took an argument. Now it does not.

The mechanism matters as much as the rate. A block assessment reaches back across the period rather than settling one year, so holdings and gains that were never declared are pulled in together rather than examined in isolation.

Where the 60% Comes From

Section 113 sets the rate for block period income, and surcharge sits on top of it. This is not a rate anyone meets by trading; it is what applies to what was hidden and then discovered.

The ordinary position remains a flat 30% with 4% cess under Section 115BBH. The gap between 30% and 60% is the price of the coins never appearing in a return.

What Follows From It

Documentation is the defence, and it is boring work. Acquisition records, transfer records and a history that reconciles to what platforms report are what keep a holding from being characterised as undisclosed in the first place.

From 1 April 2026 the department also receives user level statements from platforms under Section 509(1), and offshore account data begins moving under CARF from April 2027. Undeclared positions get harder to keep quiet each year.

Frequently Asked Questions

The questions this term raises most often.

Not on ordinary trading. Trading gains are taxed at a flat 30% plus 4% cess under Section 115BBH. The 60% under Section 113 applies to undisclosed income assessed for a block period after a search, which since Finance Act 2025 expressly includes virtual digital assets.

An assessment covering a period of years rather than a single year, used where undisclosed income is found. Section 158B carries the definition and Section 113 sets the rate at 60% with surcharge on top.

Declare the disposals, keep acquisition evidence for every lot, and reconcile your history against what exchanges report. Complete records are the difference between a computation and an argument.

This page states the law and what CryptoKar computes from your trade history. It is not tax advice. Judgment calls belong with a chartered accountant. Sections and dates here were read against the source on 21 August 2026.

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