Editorial: Surveillance under the guise of tax enforcement

At a time when digital communication is deeply integrated into our professional and personal lives, allowing government easy access to sensitive public data is fraught with danger 

Though lofty in its intent, the new Income Tax Bill, 2025, has raised concerns about privacy and overreach. The Bill, now under the review of a Select Committee and set to come up for discussion during the coming monsoon session of Parliament, gives sweeping powers to the tax authorities to access private communication platforms such as WhatsApp, Telegram and email accounts. It further allows them to override security codes and enter virtual digital spaces, including online investment platforms and encrypted messaging services. This level of intrusion is deeply troubling. Experts warn that such provisions will set a dangerous precedent for government surveillance under the guise of tax enforcement. The ostensible aim of the new Bill, replacing the Income Tax Act of 1961, is to simplify the law for both taxpayers and administrators and reduce litigation. However, the new legislation introduces explicit provisions empowering authorities to access and seize virtual digital spaces and expands “undisclosed income” to cover virtual digital assets. Taxmen can access encrypted communications, cloud storage and digital asset exchanges if they believe a person has concealed taxable income. Union Finance Minister Nirmala Sitharaman sought to justify the idea on the grounds that gathering evidence from digital accounts is essential not only to prove tax evasion before a court of law but also to compute the exact amount of tax evaded. However, without proper judicial oversight, empowering tax administrators with such vast powers would be detrimental to the public interest.

At a time when digital communication is so deeply integrated into our professional and personal lives, allowing the government easy access to sensitive public data is fraught with danger. Moreover, the Bill offers no judicial oversight over these powers. In fact, it enables authorities to keep to themselves the reasons undergirding a search. Clause 249 of the new Bill prevents disclosure of the investigative reasons behind searches, hindering taxpayers’ ability to challenge them effectively. The search powers must not be arbitrary. Introducing judicial warrants, similar to the systems prevailing in the United States and the European Union, could help bolster fairness and accountability. A computer system is defined widely to include all manners of data storage and what is described as a “virtual digital space” — among other things, email servers, social media accounts and digital application platforms. Should a taxpayer deny access to these spaces, the authorities can now override access codes to enter the system. Another area of concern pertains to the vague definition of “undisclosed income,” which now includes digital tokens and cryptocurrencies. India has yet to establish a clear regulatory framework for cryptocurrencies, making it unfair and arbitrary to classify them as undisclosed income without proper guidelines. The right to privacy, upheld by the Supreme Court as a fundamental right, would be at risk if tax authorities were allowed to monitor digital communications without stringent judicial oversight.

---