The Income-Tax Bill, 2025, introduced in the Lok Sabha on February 13, 2025, proposes modernizing India’s direct tax framework by replacing the six-decade-old Income Tax Act, 1961. While the bill simplifies tax laws and includes provisions for virtual digital asset taxation and presumptive tax schemes, it controversially grants tax authorities access to taxpayers’ emails and social media during investigations.
Finance Minister Nirmala Sitharaman emphasized that the bill aims to enhance efficiency and transparency, but privacy advocates and experts have raised concerns about potential misuse of these powers. The bill is currently under parliamentary review and is expected to take effect from April 1, 2026.
Simplified Tax Laws but Privacy Concerns Persist
The new Income-Tax Bill consolidates the existing law’s 52 chapters into 23 chapters and reduces its word count by nearly half, making it easier to understand for taxpayers. It introduces a unified “tax year” aligned with the financial year and simplifies compliance by removing redundant provisions. However, Clause 247 of the bill allows tax officers to bypass passwords and access digital platforms like emails and social media during searches if taxpayers refuse cooperation.
Experts like Kamal Agarwal have called for safeguards such as requiring higher-level approvals before accessing private information. BJP MP Tejasvi Surya praised the bill for its simplicity but did not address privacy concerns.
The bill also expands presumptive taxation schemes for small businesses and professionals. For example, turnover limits for businesses have been raised to ₹3 crore, while professionals can now declare income under this scheme if their gross receipts are up to ₹75 lakh. Additionally, virtual digital assets like cryptocurrencies are included in undisclosed income definitions, reflecting the government’s focus on regulating digital transactions.
Background: A Push for Modernization
The Income-Tax Act, 1961, has undergone numerous amendments over the years, leading to complexity and confusion. The new bill seeks to address these issues by introducing clearer language and modern compliance structures. It replaces outdated terms like “assessment year” with “tax year” and consolidates salary deductions into a single section. Despite these updates, no major changes have been made to tax rates or penalty provisions.
However, the provision granting access to digital platforms has sparked significant debate. Historically, tax officers faced legal challenges when attempting to access digital devices without explicit legal backing. While the government argues that this provision enhances enforcement capabilities, critics warn that it could lead to overreach and infringe on citizens’ privacy rights.
The Logical Indian’s Perspective
While simplifying India’s tax laws is a welcome step toward reducing litigation and improving compliance, granting unchecked access to personal digital platforms raises serious privacy concerns. The Logical Indian believes that robust safeguards must be implemented to prevent misuse of these powers and ensure accountability.
Policymakers must strike a balance between effective enforcement and protecting citizens’ fundamental rights. We encourage our readers to reflect: Should privacy take precedence over stricter tax compliance measures? Share your thoughts!
