The central government is continuously saying that the new income tax bill aims to simplify tax laws. However, the new bill is again creating buzz because of a concerning provision buried within the bill grants tax authorities extensive powers to scrutinize taxpayers’ personal information, including emails, social media profiles, and trading accounts, during tax investigations.
The main worry is a specific clause, “virtual digital spaces“, said media reports. Media reports suggest that under the new bill, tax authorities can demand access to digital assets, and if a taxpayer refuses, they can bypass passwords, override security settings, and unlock files. Presently, tax officers can seek access to laptops, hard drives, and emails. However, the current tax law doesn’t explicitly mention digital records, because of which such demands often face legal pushback.
Clause 247 of the new income tax bill says that designated income tax officers in India will now have the right to access individuals’ emails, social media, bank details, and investment accounts, in certain cases, starting April 1, 2026, if they suspect tax evasion or undisclosed assets on which tax is unpaid.
“Break open the lock of any door, box, locker, safe, almirah, or other receptacle for exercising the powers conferred by clause (i), to enter and search any building, place, etc., where the keys thereof or the access to such building, place, etc., is not available, or gain access by overriding the access code to any said computer system, or virtual digital space, where the access code thereof is not available,” read the clause.
In simple terms, the new rule gives officers access to a taxpayer’s “virtual digital space”. This includes any platform where users interact using computers, such as cloud storage, email, social media, and online trading platforms.
New Income Tax Bill: What Experts Are Saying?
Experts are sounding the alarm about the new rule. Vishwas Panjiar of Nangia Andersen LLP told Reuters that it marks a significant change from the existing tax law. He fears that without proper protections, tax authorities may abuse their newfound powers. This may lead to harassment and unwarranted invasions of privacy.
However, Sanjay Sanghvi, a partner at Khaitan & Co, said that tax authorities have previously requested access to digital devices, but the law didn’t explicitly permit it, leaving a gray area. The new bill removes to make it a legal requirement for taxpayers to provide access, effectively closing the loophole.
“This provision will bring clarity, but it has a concerning aspect: allowing any Income Tax officer to access emails or social media accounts. To address this, the provision should be amended to require permission from higher authorities, such as Joint Directors or Additional Directors, before accessing private information. Additionally, I strongly believe that taxpayers’ social media accounts should be off-limits for scrutiny, as it’s an invasion of their privacy,” Chartered Accountant Kamal Agarwal said to News24.
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