I-T dept to limit access to digital, social media accounts only for specific search, survey; common taxpayers unaffected: Report

The Income Tax Department has reaffirmed that its access to digital and social media accounts is restricted to specific search and survey operations, safeguarding the online privacy of common taxpayers. This enforcement measure, affecting only a small portion of the approximately 8.79 crore income-tax returns filed annually, is targeted solely at cases with significant suspicions of tax evasion. 

Income tax officials told news agency PTI that the provisions related to 'virtual digital space' are applicable exclusively during active search or survey actions and not before these operations commence. They stressed, "The tax department does not snoop or make a back door entry against any individual or entity through their social media accounts." 

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The recently introduced Income Tax Bill 2025 reiterated existing legal provisions from the 1961 Act, without introducing new powers. This bill has attracted attention due to its potential implications for taxpayer privacy, but officials have dismissed fears of increased authority, labelling such reports as "fear mongering". 

"These powers are only to be executed during the course of a search or survey operation, and that too when the assessee being searched or surveyed refuses to share the passwords for digital storage drives, emails, Clouds and communication platforms such as WhatsApp and Telegram, etc.," an official stated. This access is critical for gathering evidence for legal proceedings and calculating the precise amount of evaded tax.

Income Tax Bill 2025

The recently introduced Income Tax Bill for the year 2025 has granted the government the authority to permit tax authorities to access various private digital platforms, including emails, social media accounts, and online financial platforms. This proposed bill, which was presented in Parliament in February after the Union Budget for 2025, allows tax officers to enter digital spaces to gather information in cases where there is suspicion of concealed income or assets.

Prior to the introduction of this bill, income tax officers were restricted to accessing physical spaces, such as lockers or safes, only if keys or access were not available.

The new bill introduces the notion of "virtual digital spaces" and authorizes officers to access emails, social media, cloud storage, and online financial accounts if tax evasion is suspected. While the bill aims to combat modern tax evasion methods, it raises concerns about the balance between enforcement and privacy.

The upcoming Income Tax Bill, 2025, will give the department greater authority, especially in terms of electronic and digital record-keeping. Key provisions of the bill include:

Access to computer system: Revenue authorities can request access to electronic records, emails, and social media accounts if there are suspicions of tax evasion.
Overriding access codes: In cases where individuals refuse to provide passwords or access codes, authorities have the power to override digital security measures to investigate financial and communication data.
Access to Virtual Digital Space: Revenue authorities are also allowed to access virtual digital spaces.

Tax evasion

The sophistication of tax evasion techniques, utilising advanced Internet-based tools, necessitates this level of scrutiny during search operations. "Tax crimes and the methods of tax evasion have attained a new level of sophistication with the advent of smart Internet-based tools and technology," the official said, highlighting the department's need to adapt enforcement strategies. The bill has incorporated measures such as 'over-riding' access codes to ensure comprehensive investigations, underscoring the vital role of digital access in uncovering hidden information.

Annually, around 100-150 "full blown" searches and surveys are conducted, underscoring the selective and targeted nature of these operations. These searches, supported by the current framework, aim to address sophisticated evasion tactics without infringing on the privacy rights of average taxpayers. The department remains committed to maintaining a balance between effective enforcement and respecting individual privacy.