Sweeping powers for income tax authorities in digital space to face legal hurdle, say experts

The provision in the new Income Tax Bill that provides sweeping powers to tax authorities to access social media and e-mails of assessees in case of suspected tax evasion is set to face legal hurdle, as it will impinge on individuals’ right to privacy, according to legal experts.

Income Tax Bill 2025, recently introduced in the Parliament, gives Income-Tax officials the legal authority to inspect a wide range of personal and financial digital spaces, termed as virtual digital spaces in the Bill.

Presently, Section 132 of the Income-Tax Act, 1961, allows tax officials to seize assets and books during search operations if they find sufficient reasons to believe that an individual is in possession of undisclosed income or assets. The changes in the Bill, once passed in the Parliament, will extend this authority to the digital realm, allowing officials to bypass security measures on computer systems and virtual spaces.

‘Legal hurdle’

Legal experts believe that the Bill, which gives overarching power to tax official to access digital platforms over mere suspicion of tax evasion, will face legal hurdle and can be challenged in the courts.

Shiju PV, Senior Partner, IndiaLaw LLP, said right to privacy is a fundamental right under the Constitution but unfortunately most of the laws regulating internet tends to be in complete disregard of individual rights, facilitating government surveillance and fostering unchecked government power.

The new Bill once enacted is definitely going to be challenged on Constitutional validity, said Shiju.

Aditya Bhattacharya, Partner, King Stubb & Kasiva, Advocates and Attorneys, said China’s cyber security laws is infamous taking steps to go through email and social media accounts even as most developed economies have strict safeguards to ensure privacy.

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“There is a huge movement of monies through non-banking channels. If this needs to be detected, government authorities need to take steps. If the provisions are not backed by adequate machinery provisions, chances are high it will be challenged before the High Courts or directly before the Supreme Court,” he said.

Ketan Mukhija, Senior Partner Burgeon Law, said while similar laws exist in the US and the UK, they include judicial oversight.

‘Safeguards essential’

Moreover, he said to protect citizens, safeguards such as judicial approval, limited access scope and appeal mechanisms are essential.

Nilesh Tribhuvann, Managing Partner, White & Brief – Advocates & Solicitors, said the timing of this Bill—coinciding with Apple’s refusal to provide access to Arvind Kejriwal’s iPhone—raises questions about whether it is a response to tech companies resisting government access to encrypted data. If so, it could signal a shift towards more aggressive enforcement tactics in tax investigations, he said.

To protect common citizens, he added the Bill must establish clear boundaries and ensure that surveillance is used only in exceptional cases, based on judicial approval, and include robust checks to prevent misuse.