The newly introduced Income Tax Bill 2025 will grant the government the authority to allow tax authorities access to various private digital platforms, including emails, social media accounts, and online financial platforms. The proposed bill, presented in Parliament in February following the Union Budget 2025, enables tax officers to enter digital spaces to obtain information if there is suspicion of concealed income or assets.
This extension of search and seizure powers has raised privacy concerns as the government will now be able to monitor not only physical properties but also personal online activities.
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Prior to this bill, income tax officers were limited to accessing physical spaces, such as lockers or safes, in cases where keys or access were not available.
What does the new Bill say
The new bill introduces the concept of "virtual digital spaces" and authorizes officers to access emails, social media, cloud storage, and online financial accounts in case of suspected tax evasion. The bill is designed to address contemporary tax evasion techniques, yet it prompts scrutiny regarding the equilibrium between enforcement and privacy. This enhanced enforcement authority is specified in Section 247 of the Income Tax Bill, 2025, aligning with the current Section 132 of the Income Tax Act, 1961, albeit with broader scope.
"Starting April 1, 2026, the Income Tax Department will be granted extensive legal authority to access digital platforms, including social media accounts, personal emails, bank accounts, online investment accounts, trading accounts, and other virtual digital spaces, if there is suspicion of tax evasion or undisclosed assets. This expanded enforcement power is outlined in Section 247 of the Income Tax Bill, 2025, which corresponds to the existing Section 132 of the Income Tax Act, 1961, though with expanded coverage," explained CA Suresh Surana.
Legal Provisions for Search and Seizure (Existing Provision)
Existing Authority under Section 132 of the Income Tax Act, 1961. Under the current law, authorised tax officers have the power to:
> Enter and search premises, vehicles, or aircraft suspected of housing undisclosed income, valuables, or financial records.
> Break open locks of safes, lockers, or any other storage units if access is denied.
> Search individuals to check for concealed books of accounts, money, bullion, or valuables.
> Seize or place identification marks on records, financial statements, and other relevant documents, etc.
Expanded authority under Section 247 of the Income Tax Bill, 2025 (Proposed Provision)
The proposed Income Tax Bill, 2025, grants the department significantly enhanced powers, particularly in relation to electronic and digital records. Some of the key provisions include:
> Access to computer system: Revenue authorities may demand access to electronic records, emails, and social media accounts under suspicion of tax evasion.
> Overriding access codes: If individuals refuse to provide passwords or access codes, authorities are empowered to override digital security measures to inspect financial and communication data.
> Access to Virtual Digital Space: Revenue authorities may also access virtual digital space. The definition of “virtual digital space” in Section 261(i) includes:
Section 253 (Power of Survey)
Similar amendments have been proposed in Section 253 (Power of Survey) of the Income Tax Bill, 2025, which corresponds to Section 133A of the Income Tax Act, 1961
What does this mean for taxpayers?
"This legal framework modernizes tax investigations by aligning enforcement powers with technological advancements. However, concerns regarding privacy, data security, and potential misuse of such broad access powers highlight the importance of clear safeguards and oversight mechanisms. Commencing from FY 2026-27, individuals and businesses must ensure full compliance with tax regulations to avoid scrutiny under these expanded search and seizure powers," Surana added.
What are investors' rights?
While the Income Tax Bill, 2025 expands the government’s authority to access digital financial records and/or virtual digital space, taxpayers do have legal rights to privacy of their information due process, and fair investigation. The following rights apply in the context of tax investigations and digital access by the authorities:
> Right to Privacy & Protection Against Unlawful Access
The Right to Privacy is a fundamental right under Article 21 of the Constitution of India. Any action taken by tax authorities must adhere to constitutional safeguards and cannot be arbitrary or excessive. Under the Information Technology Act, 2000, unauthorized access to personal data, including social media, emails, or digital assets, is subject to strict data protection laws.
> Right to Due Process & Fair Investigation
Tax authorities cannot conduct arbitrary searches or seizures without following proper legal procedures and obtaining necessary authorizations. If a taxpayer is accused of evasion, they have the right to be heard and present their case before any penalty or prosecution is imposed.
3. How to navigate this clause?
"The exact implementation framework for these expanded powers may be determined once the Income Tax Bill, 2025 is enacted. The Central Board of Direct Taxes (CBDT) may issue detailed rules and guidelines, specifying the conditions and procedures under which tax authorities can access social media accounts, emails, and digital financial records. Until official notifications are released, the scope and operational details of these provisions remain subject to further clarification by the government. Once the Act is implemented, additional regulations may define safeguards, protocols, and compliance measures to ensure lawful enforcement while balancing taxpayer rights and data privacy," Dr Surana added.