Major Overhaul: Finance Bill 2025 to Focus on Undisclosed Income

The government has amended the Finance Bill, 2025, focusing on assessing undisclosed income in search cases rather than the total income. Approved by the Lok Sabha, these changes are retrospective from September 1, 2024. This shift aims to trust taxpayers more and streamline search assessments.

The government has introduced pivotal amendments to the Finance Bill, 2025, which significantly alter the way tax officers assess income during search cases. Under the new regime, only undisclosed income will be evaluated, as opposed to the previously broader assessment of total income.

Following the Lok Sabha approval, these changes are set to be applied retrospectively from September 1, 2024. The move aligns with 35 other amendments enacted into the Finance Bill, reflecting a substantial shift in tax strategy. A central feature is the transition to focusing solely on undisclosed income, fostering a climate of trust with taxpayers.

Analysis by EY suggests that these amendments effectively revive the pre-2003 block assessment regime's limitations, concentrating solely on undisclosed income while maintaining regular income evaluations separately.

(With inputs from agencies.)