Income tax officers in India will now be able to access the digital accounts of individuals if deemed necessary. The new norms of the Income Tax Bill, 2025 expand the authority of tax officers and allows them to gain access to the social media accounts, emails, trading platforms, online investments, and bank accounts of individuals if they suspect tax evasion.
The rule will come into effect from April 1, 2026, if the new Income Tax Bill is approved. When Finance Minister Nirmala Sitharaman introduced the new bill in Parliament this year, she termed it an overhaul of the six-decade-old tax framework.
What Does The Current Law Say?
Currently, Section 132 of the Income Tax Act, 1961, allows tax officials to search and seize physical assets if they suspect that the taxpayer has concealed information about income or property. The law allows investigators to break into locked doors, lockers, and safes to gain access.
Changes Under Proposed Income Tax Bill
However, this provision of the bill proposes to claw at the privacy of taxpayers if the officials suspect them of evading taxes. Clause 247 of the tax bill grants officers legal access to ‘virtual digital spaces’ to investigate undisclosed income or assets.
Virtual Digital Spaces broadly include social media accounts (WhatsApp, Instagram, etc), email accounts, bank and investment accounts, trading platforms, and cloud storage.
The new tax laws expand the authority of officers and allows them to override passwords and security codes to gain access to computers, online financial accounts, and emails.
What Does It Mean For Taxpayers?
The new provisions could help curb black money but they also pose a serious risk to the privacy of taxpayers as the law allows tax authorities to gain complete access to virtual life. However, the law provides no safeguards for the public to ensure that investigators don’t misuse or abuse their power. Not only does this harm the privacy of a taxpayer, it also exposes them to being unnecessarily scrutinised by the system.
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