New Delhi, Aug. 26 -- The Income Tax Act, 2025 has changed how unexplained income is taxed, with a sharp difference depending on whether a taxpayer voluntarily discloses it or the tax department detects it.

Here's what taxpayers need to know about the rules and how they compare with the 1961 Act.

Somesh Jain, Advocate at Chambers of Sachdev & Jain, noted that "unexplained income refers to incomes covered under Sections 68 to 69D of the Income-tax Act, 1961 (corresponding to Sections 102 to 106 of the Income-tax Act, 2025)".

He said the provisions apply where:

"In all such cases, where the assessee offers no explanation or the explanation offered is found to be unsatisfactory, the amount may be treated as unexplained income and subject...