Finance Minister Nirmala Sitharaman has come out in strong defence of a contentious provision in the Income Tax Bill, 2025, which grants tax authorities the power to access encrypted messages and emails to crack down on tax evaders and financial criminals. Speaking in New Delhi this week, she justified the move by pointing to a recent case where decrypted WhatsApp messages led to the seizure of over Rs 90 crore in cryptocurrency assets from an illicit syndicate.
Highlighting the growing misuse of encrypted communication channels, Sitharaman noted that criminals are increasingly turning to platforms like WhatsApp for activities such as money laundering and tax evasion. “The 1961 Income Tax Act mentions physical books of account, ledgers, and manual records but does not address digital records. This creates contention, as individuals may question why their digital records are required despite showing physical ledgers. The new bill aims to address this gap,” she said while speaking in Parliament.
The Finance Minister revealed that tax authorities have already traced and confiscated Rs 250 crore in unaccounted funds through scanning encrypted messages and mobile phones. “WhatsApp revealed syndicates involved in bogus bills worth Rs. 200 crores, and instances where capital gains on land sales were manipulated using false documents, reducing Rs 150 crores to Rs 2 crores. Professional groups on WhatsApp have also been implicated,” Sitharaman explained.
She added that even Google Maps history has been used to locate hideouts containing cash and track unaccounted transactions, while Instagram profiles helped establish ownership of high-end vehicles tied to benami properties.
The Finance Minister did not elaborate on how encrypted messages were accessed, sparking questions over whether WhatsApp’s encryption was broken or if authorities merely seized devices to extract information. The bill’s scope remains broad, and it is unclear how it will reconcile with the strong encryption policies employed by messaging platforms.
Meta-owned WhatsApp, which claims to have around three billion users globally, has not commented on the proposed legislation. The messaging platform continues to assert that its end-to-end encryption ensures that only the sender and recipient can view messages. “End-to-end encryption keeps your personal messages and calls between you and the person you’re communicating with. No one outside of the chat, not even WhatsApp, can read, listen to, or share them. This is because with end-to-end encryption, your messages are secured with a lock, and only the recipient and you have the special key needed to unlock and read them,” states the company’s policy.
WhatsApp and the Indian government have been at loggerheads over encryption-related issues for years. In 2021, WhatsApp filed a lawsuit against the Indian government, challenging the Ministry of Electronics and Information Technology’s (MeitY) directive that requires social media platforms to trace the originator of messages under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.
In April 2024, the messaging platform told the Delhi High Court that it might consider exiting the Indian market if forced to compromise on its encryption standards.