Tax authorities can access emails, social media under new I-T Bill

Extending powers to the tax authorities to investigate any tax evasion by probing their virtual spaces, a provision in the new income tax bill makes it legal for a competent tax authority to get access to your social media accounts, personal emails, and even bank accounts and trading accounts if they suspect tax evasion or you are the one in the possession of undisclosed income, property, etc.

Under the Section 132 of the existing I-T Act, 1961, tax authorities can already conduct searches and seizures on the suspicion of an undisclosed income or property. They can enter the premises of any person and conduct a search and seize crucial documents.

The clause 247 of the Income Tax bill says: "...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."

According to the new income tax law, the "virtual digital space” entails email servers, social media account, online investment account, trading account, banking account, etc.; any website used for storing details of ownership of any asset; remote server or cloud servers; digital application platforms; and any other space of similar nature.

The law also says such people are expected to provide the necessary technical and other assistance, including access code, to enable the inspection of such books of account or other documents, or computer system, or any other material connected with such system, including virtual digital space, as may be required.

The new also defines what entails a "computer system”. "...computers or networks or resources or devices, digital or electronic data storage devices, used on stand-alone mode or part of a computer system, linked through a network". They could also be devices utilised through intermediaries for information creation or processing or storage or exchange. They could also include the remote server, the cloud server, or the virtual digital space.

Sitharaman in February 2025 tabled the much-anticipated Income Tax Bill, 2025, in the Lok Sabha, marking a decisive break from the Income Tax Act of 1961. Slated to take effect from April 1, 2026, the draft bill has been hailed by tax experts and industry leaders as a landmark reform, which will modernise India’s tax framework, eliminate ambiguity, and enhance clarity.