New Income Tax Bill gives Authorities Access to Taxpayers’ Email, Social Media and other Digital Records
The government has introduced a new Income Tax Bill that grants tax authorities extensive access to taxpayers’ digital records, including emails, bank accounts, trading platforms, and social media. The bill, which aims to modernize tax laws, was presented by Union Finance Minister Nirmala Sitharaman in the Rajya Sabha during the Budget session.
The Income Tax Bill, 2025, proposes sweeping changes that would allow tax officials to access electronic records during searches. This includes email servers, online investment accounts, bank and trading accounts, social media, and cloud-based applications. The proposed legislation will first be reviewed by a parliamentary select committee before moving forward.
New Digital Access Powers for Tax Officials
Under the current law, tax officials could demand access to physical devices like laptops and hard drives, but digital access was a gray area since the law did not explicitly mention it. With the new bill, tax authorities would have clear legal backing to access electronic records and “virtual digital space.”
Legal experts have pointed out that the term virtual digital space was not covered in the old Income-tax Act, 1961. The new bill defines it as platforms that allow users to interact using computers, including email services, financial accounts, social media platforms, and cloud storage.
If a taxpayer refuses access to these digital records, tax authorities would be legally allowed to override system protections to retrieve the required information.
Concerns Over Digital Privacy
The proposed law has raised concerns among legal and financial experts. Vishwas Panjiar, a partner at Nangia Andersen LLP, noted that these broad powers could lead to taxpayer harassment or unnecessary scrutiny of personal data. He emphasized the need for clear safeguards to ensure tax investigations do not violate privacy rights.
Similarly, Sanjay Sanghvi, a partner at Khaitan & Co, highlighted that while authorities previously attempted to access digital records, the lack of specific provisions in the law meant that taxpayers could contest such demands. The new bill removes this legal ambiguity by explicitly allowing digital access during tax investigations.
The Finance Ministry has not yet commented on these concerns. However, the bill is expected to undergo parliamentary scrutiny, where discussions on data privacy and taxpayer rights may take center stage.
What’s Next?
The Income Tax Bill, 2025, represents one of the most significant overhauls of India’s tax laws in decades. While it aims to modernize tax investigations, experts warn that its implementation must be balanced to protect taxpayers’ digital privacy. The parliamentary committee’s review will be crucial in shaping the final version of the law.
