Tax Bill Allows Govt to Access Emails, Social Media, Bank Accounts
Raising Concerns Over Surveillance, Lack of Safeguards
March 8, 2025
Starting April 1, 2026, the Income Tax Department will have the authority to access individuals’ digital spaces—including social media accounts, personal emails, bank accounts and online investment platforms—if they suspect tax evasion or possession of undisclosed assets.
This expansion of power is part of the new Income Tax Bill, which aims to “modernise” tax enforcement by including virtual digital spaces, as reported by The Economic Times.
Under the existing Income Tax Act of 1961, authorised officers can conduct searches and seize assets if they believe an individual possesses undisclosed income or property. They are permitted to break open physical locks to access potential evidence. The new bill extends these powers to digital realms, allowing officers to override access codes to computer systems and virtual spaces when access is denied or unavailable.
Concerns are being raised that without proper judicial oversight and procedural safeguards, these expanded powers could infringe upon fundamental privacy rights and lead to potential misuse.
“Without clear safeguards, these extensive powers could lead to taxpayer harassment or unnecessary scrutiny of personal data,” Reuters quoted Vishwas Panjiar, a partner at law firm Nangia Andersen LLP, as saying.
The bill does not carry specific checks and balances to regulate these expanded powers, raising fears of possible misuse and arbitrary scrutiny.
India currently lacks a comprehensive data protection law that governs how personal and financial information is collected, stored and used by government agencies, including tax authorities.
While the Digital Personal Data Protection Act, 2023, was enacted to regulate data handling by private and public entities, concerns remain about its adequacy in ensuring sufficient safeguards against government overreach. The law provides certain exemptions for government agencies, allowing them to process personal data without explicit consent in cases of national security, law enforcement and taxation, which raises fears about potential misuse.
The Income-tax Bill, 2025, introduced in the Lok Sabha on Feb. 13, 2025, says it aims to simplify language and remove redundant provisions. The bill retains key provisions of the existing law, including tax rates, tax regimes for individuals and corporations and definitions of offences and penalties, as noted by PRS India. If passed, it will take effect from April 1, 2026.
One of the major changes in the bill is granting the central government the power to create new schemes to improve efficiency, transparency and accountability in tax administration. These schemes will use technology to reduce direct interactions between taxpayers and officials, ensuring a more streamlined process. The government must present all such schemes before Parliament before implementing them.
The bill also expands the definition of undisclosed income to include virtual digital assets. This means that cryptographically generated codes, numbers, or tokens representing digital value, such as cryptocurrencies, will be subject to taxation and scrutiny under tax laws.
This aligns with proposals in the Finance Bill, 2025, which seeks to regulate digital assets.
The bill retains the option for eligible taxpayers, such as those involved in transfer pricing cases, non-residents, or foreign companies, to refer their draft assessment orders to a dispute resolution panel. This panel is now required to issue directions that will guide the final assessment, ensuring more structured dispute resolution.
At present, the bill is still under parliamentary consideration and has not yet been enacted into law.
