‘New Income Tax Bill grants authorities unchecked access to email, social media’
New Delhi: The newly introduced Income Tax Bill, 2025, has sparked controversy due to a provision that significantly expands the investigative powers of tax authorities. While the government has positioned the Bill as a modernisation effort, legal experts and privacy advocates are raising concerns over a clause that permits officials to access emails, trading accounts, and even social media profiles during tax investigations.
Finance Minister Nirmala Sitharaman presented the Bill in Parliament, describing it as a long-overdue update to the existing tax framework, which has been in place for over six decades. Before the Bill becomes law, it will undergo review by a select committee. However, a key issue drawing scrutiny is its explicit inclusion of “virtual digital spaces” under the ambit of tax searches.
Under current laws, tax authorities can request access to physical and digital records, such as laptops and emails, but legal ambiguities often limit their reach. The new Bill removes this uncertainty, granting officials the authority to demand access to various digital assets. If a taxpayer refuses, authorities will be empowered to bypass passwords and override security settings to unlock files.
Clause 247 of the Bill states that designated tax officers will have the right to examine emails, social media, bank records, and investment accounts if they suspect undisclosed assets or tax evasion. This provision will come into effect on April 1, 2026.
The Bill further specifies that tax officials can “break open the lock of any door, box, locker, safe, almirah, or other receptacle” when carrying out searches. It also grants them the ability to override access codes to computer systems or any “virtual digital space” where access credentials are not provided by the taxpayer.
This unprecedented access has raised alarm among legal experts. Vishwas Panjiar, a partner at Nangia Andersen LLP, told Reuters that the move marks a significant departure from the Income-tax Act of 1961.
“This represents a notable shift from the existing framework, which did not explicitly cover digital domains,” Panjiar said. “Without clear safeguards, these extensive powers could lead to taxpayer harassment or unnecessary scrutiny of personal data.”
Sanjay Sanghvi, a partner at Khaitan & Co, pointed out that while tax authorities have previously sought access to digital devices, the legal framework never explicitly supported such actions. The new Bill, he said, removes that ambiguity and makes compliance mandatory.
Legal analysts and privacy advocates argue that the Bill requires robust safeguards to prevent misuse of these new powers. With digital assets increasingly forming a critical part of financial transactions, concerns about potential overreach and the lack of clarity on data protection are expected to be central to the parliamentary review process.
