The new income tax bill has recently been in the news, and not for the reasons taxpayers would hope. While the government said it’s all about simplifying tax laws, buried within the bill is a provision that hands sweeping powers to tax authorities allowing them to dig through emails, trading accounts, social media profiles, and more during tax investigations.
Finance Minister Nirmala Sitharaman introduced the revamped Income Tax Bill, 2025, in Parliament, calling it an overhaul of the six-decade-old tax framework. But before it becomes law, a select committee will review it. And the key concern is a clause that expands the scope of tax searches beyond what’s currently allowed to include “virtual digital spaces”.
Right now, tax officers can ask for access to laptops, hard drives, and emails, but since the current tax law doesn’t explicitly mention digital records, such demands often face legal pushback. However, the new bill makes it clear: tax authorities can demand access to digital assets, and if a taxpayer refuses, they can bypass passwords, override security settings, and unlock files.
As per clause 247 of the new income tax bill, designated income tax officers in India will now have the right to access your 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 not paid.
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.”
Simply put, officers will have free rein over anything stored in a taxpayer’s “virtual digital space,” a term the bill defines as platforms allowing users to interact via computers, including cloud servers, email accounts, social media, and trading platforms.
Legal experts aren’t thrilled. Vishwas Panjiar, a partner at Nangia Andersen LLP, told news agency Reuters that it is a major shift from the existing Income-tax Act, 1961. He warned that without strict safeguards, these new powers could lead to harassment and unnecessary scrutiny of personal data.
“This represents a notable departure from the present Income-tax Act, 1961, which did not explicitly cover such digital domains,” Panjiar said. “Without clear safeguards, these extensive powers could lead to taxpayer harassment or unnecessary scrutiny of personal data.”
Sanjay Sanghvi, a partner at Khaitan & Co, pointed out that while tax authorities have previously demanded access to digital devices, the law never explicitly allowed it. The new bill eliminates that gray area, making it legally binding for taxpayers to hand over access.