New IT Bill Grants Authorities Access To Taxpayer’s Devices, Social Media Accounts
These activities were not covered in the current tax law;
New IT Bill Grants Authorities Access To Taxpayer’s Devices, Social Media Accounts
These activities were not covered in the current tax law
The Central government has stated that the Income Tax Bill, 2025, will provide the authorities the power to access taxpayers' email servers, online investment accounts, trading and bank accounts, social media accounts and digital application servers.
While simplifying the six-decades-old legislation, the revamped and condensed version of the Income Tax law was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha. However, it will first be screened by the Parliament’s select committee.
Explaining the structure, Sanjay Sanghvi, a partner at Khaitan & Co said, “Under the present law, tax authorities demanded access to taxpayers' laptops, hard disks and emails, but it was open to contention, as the law did not explicitly mention accessing devices or records.”
Under the new bill, the taxpayer being investigated by the authorities would have to provide access to his electronic records and ‘virtual digital space (VDS)’, not covered in the current decades-old law.
The Bill states that if access to such records is declined, the tax authorities can override the systems.
"This represents a notable departure from the present Income Tax Act, which did not explicitly cover such digital domains," expressed Vishwas Panjiar, a Partner at Nangia Andersen LLP.
He added that a balanced approach was necessary to ensure that legitimate tax investigations do not infringe on digital rights and privacy. "Without clear safeguards, these extensive powers could lead to taxpayer harassment or unnecessary scrutiny of personal data.”
