Skip to content

CA Final · Direct Tax Laws & International Taxation · Taxation of Digital Transactions

Searches were initiated on a trader, Kavita Traders, in the tax year 2026-27, and the last panchnama was drawn on 20 August 2026. Kavita Traders held unaccounted Bitcoin not recorded in its books. For the block period under the Income-tax Act, 2025, which statement is correct?

The block period covers the six tax years before 2026-27 plus 1 April 2026 up to the last panchnama on 20 August 2026. Undisclosed income expressly includes virtual digital assets, so unrecorded Bitcoin representing income not disclosed qualifies.

  1. AThe block period is the six tax years preceding 2026-27 plus 1 April 2026 to 20 August 2026, and unrecorded virtual digital assets can be undisclosed incomeCorrect
  2. BThe block period is only the tax year 2026-27, and virtual digital assets are outside undisclosed income
  3. CThe block period is the ten tax years preceding 2026-27 and covers only cash and bullion
  4. DThe block period ends on the date the warrant of authorisation was issued, and virtual digital assets are excluded

Explanation

Section 301(a) defines block period as six tax years preceding the tax year of search plus the period from 1 April of that year to the execution of the last authorisation. For a search, execution is the conclusion recorded in the last panchnama. Section 301(e) expressly includes virtual digital assets in undisclosed income, so the other options misstate the period or the scope.

Did you get it right without looking?

One question tells you little. A timed set on Taxation of Digital Transactions shows your real accuracy, how long you take and where you lose marks.

Practise Taxation of Digital TransactionsFree diagnostic mock

More Taxation of Digital Transactions questions