New Income Tax Bill retains powers for tax officials to access social media, emails during raids

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The Parliamentary Select Committee reviewing the government's proposed Income Tax Bill 2025 has upheld controversial provisions allowing tax officials to forcibly access individuals' social media accounts, private emails, and other data from other digital platforms during search and seizure operations.

The committee's decision, part of its 4,575-page report tabled in the Lok Sabha on Monday, keeps intact sweeping powers granted to tax officers, despite concerns raised by legal and industry experts during consultations, The Hindu reported.

The new bill, introduced in February, aims to replace the Income Tax Act of 1961 by simplifying the law and reducing decades of amendments. It was referred to a committee chaired by BJP MP Baijayant Panda for detailed review.

Critics have objected to the bill's expanded scope for digital surveillance during searches. 

According to the proposed law, anyone in possession of digital data must provide "reasonable technical and other assistance (including access code, by whatever name called)" to tax officers during inspections. The law also authorises officers to override access protections if login credentials are not shared.

The definition of "virtual digital space" includes social media accounts, cloud storage, trading platforms, online bank accounts, and mobile apps.

Stakeholders urged the committee to limit these powers. Suggestions included requiring officers to record specific reasons before accessing private data, restricting access strictly to matters relevant to tax investigations, and excluding social media access altogether.

However, the committee rejected these suggestions, stating that "various incriminating evidences and material are found/seized from electronic records including WhatsApp communications, emails, etc."

"In most cases of search operations, taxpayers do not share login credentials… Encrypted communication modes are being used to discuss unaccounted transactions," the report said.

"The amendment has been rightly made to rationalise the provisions. Thus, the suggestion is not feasible," it said.

On demands to require written justification before accessing digital spaces, the committee responded that doing so would "seek to provide safeguard in the statute to prevent abuse of power by Revenue officials as well as protect the privacy of taxpayers"—a goal it deemed incompatible with such changes.

Despite the pushback over privacy, the report highlights major strides in simplification. The proposed Bill cuts the total word count from over 5.1 lakh to about 2.6 lakh. The number of chapters has been halved from 47 to 23, and sections reduced from 819 to 536.

To enhance clarity, it expands the number of explanatory tables from 18 to 57 and formulae from 6 to 46. 

"The language has been simplified making the document easy to read and understand," the committee said, adding that the new drafting style eliminates cross-referencing and structural redundancies.