March 5, 2025: A new provision in the recently introduced Income Tax Bill, 2025, has sparked widespread debate over privacy concerns as it grants tax authorities the power to access individuals' emails, social media, and other digital accounts during tax investigations.

Finance Minister Nirmala Sitharaman introduced the bill in Parliament, calling it a much-needed modernization of the country’s tax laws. However, legal experts and citizens alike are raising alarm over Clause 247, which significantly expands the scope of tax searches to include “virtual digital spaces.”

Currently, tax officers can request access to physical and digital records, but the lack of explicit legal provisions for digital domains has led to legal pushback. The new bill removes this ambiguity, giving authorities the right to override security settings and access locked digital data.

Under the proposed law, starting April 1, 2026, designated tax officers will have the power to demand access to personal emails, social media profiles, online trading accounts, and cloud storage if they suspect tax evasion. The bill states that officers can "break open the lock" of physical and digital spaces if access is denied, raising concerns about unchecked surveillance.

Legal experts have expressed reservations, warning that the bill could lead to potential misuse. Vishwas Panjiar, a partner at Nangia Andersen LLP, stated, “This represents a notable departure from the current Income-tax Act, 1961. Without clear safeguards, these extensive powers could lead to taxpayer harassment or unnecessary scrutiny of personal data.”

Similarly, Sanjay Sanghvi, a partner at Khaitan & Co, pointed out that while tax authorities have previously sought access to digital devices, the law never explicitly allowed it. The new bill not only legalizes this practice but also removes any legal recourse for taxpayers to refuse access.

As the bill heads for review by a select committee before becoming law, concerns are mounting over its implications on privacy and data security. Critics argue that unless strict safeguards are introduced, the bill could open doors to excessive government surveillance in the name of tax enforcement.