The recently introduced Income Tax Bill, 2025, has sparked controversy due to a provision granting extensive powers to tax authorities. While the government claims the bill aims to simplify tax laws, concerns have emerged over a clause that allows officials to access digital assets, including emails, social media, and investment accounts, during tax investigations.
Finance Minister Nirmala Sitharaman introduced the bill in Parliament, calling it a much-needed overhaul of the six-decade-old tax framework. Before becoming law, the bill will be reviewed by a select committee. However, a key point of contention is Clause 247, which broadens the scope of tax searches beyond physical records to include “virtual digital spaces.”
Currently, tax officials can request access to laptops, hard drives, and emails, but legal challenges often arise due to the lack of explicit mention of digital records in the existing law. The new bill changes that by explicitly allowing tax authorities to demand access to digital assets. If a taxpayer refuses, officials will have the authority to bypass security settings and unlock files.
According to the proposed changes, starting April 1, 2026, designated tax officers will have the right to access emails, social media accounts, bank details, and trading platforms in cases of suspected tax evasion or undisclosed assets. The bill further states that officials can “break open the lock of any door, box, locker, safe, almirah, or other receptacle” or “override access codes to any computer system or virtual digital space” where access is restricted.
Legal experts have raised concerns over the lack of safeguards in the bill. Vishwas Panjiar, a partner at Nangia Andersen LLP, called it a significant shift from the Income-tax Act, 1961, and warned that the absence of clear regulations could lead to taxpayer harassment.
“This represents a notable departure from the present Income-tax Act, which did not explicitly cover digital domains,” Panjiar told Reuters. “Without clear safeguards, these extensive powers could lead to unnecessary scrutiny of personal data.”
Sanjay Sanghvi, a partner at Khaitan & Co, noted that while tax authorities have previously demanded access to digital devices, the existing law did not provide a clear legal basis for such demands. The new bill eliminates that ambiguity, making it legally binding for taxpayers to grant access.
As the bill moves through the review process, the debate over privacy rights and regulatory oversight is expected to intensify. Lawmakers and experts are calling for clearer safeguards to prevent misuse of these sweeping powers.
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