From April 1, 2026, the Income Tax Department in India will have sweeping new powers to access individuals’ social media accounts, emails, bank accounts, and other digital platforms if they suspect tax evasion or undisclosed assets.
This authority, introduced under Clause 247 of the Income Tax Bill, 2025, enables authorised officers to override passwords and security measures to inspect “virtual digital spaces.” While officials claim this move is necessary to tackle sophisticated financial crimes, privacy advocates and legal experts warn of potential misuse and call for robust oversight and clear safeguards.
Digital Surveillance for Tax Enforcement: What’s New?
The Income Tax Bill, 2025, marks a significant shift in the government’s approach to tax investigation by explicitly extending search and seizure powers into the digital realm. Under Clause 247, senior tax officials—including Joint Directors and Additional Commissioners—can demand access to any digital platform where a taxpayer may store information about income or assets.
This includes not only social media and email, but also cloud storage, digital wallets, online trading accounts, and even data held by companies where the taxpayer is or was employed.
If a taxpayer fails to provide login credentials or access to these platforms during a search, officials are now legally empowered to bypass security measures such as passwords or encryption. “The concept of a virtual digital space is new to this bill and was hitherto undefined in the extant Income Tax Act,” said Pallav Pradyumn Narang, Partner at CNK, in a recent interview with The Economic Times.
Tax authorities argue that these expanded powers are essential to keep pace with the digitalisation of financial activity and to uncover hidden assets that may not be reflected in physical records.
From Lockers to Logins: The Evolution of Tax Investigations
Historically, tax raids in India focused on physical searches—such as opening lockers, safes, and seizing documents—to uncover unreported income or assets.
However, with the rapid shift of financial transactions and wealth storage to digital platforms, traditional methods have become less effective. The new bill acknowledges this reality by defining “virtual digital space” broadly, encompassing any digital environment where financial information may reside.
This legislative change follows global trends, as many countries are updating their laws to address the challenges posed by cryptocurrencies, online investments, and digital banking.
While the government maintains that the move is aimed at curbing black money and strengthening tax compliance, privacy advocates and digital rights groups have voiced concerns. They argue that the bill’s broad language could lead to overreach, exposing citizens to unwarranted surveillance and potential violations of their digital privacy.
The Logical Indian’s Perspective
At The Logical Indian, we recognise that effective tax enforcement is crucial for ensuring fairness and funding public welfare. However, we also believe that privacy is a fundamental right and must be safeguarded, even as the government modernises its investigative tools.
The new powers granted to the Income Tax Department must be exercised with utmost transparency, accountability, and judicial oversight to prevent misuse and protect citizens’ digital freedoms.
As India moves towards a more digital future, it is vital to strike a balance between combating financial crime and upholding individual rights. What checks and balances do you think should be implemented to ensure these powers are not abused?
