Tax sleuths may be able to access taxpayer’s email, social media accounts

The New Income Tax Bill, which was tabled in Parliament last month, has triggered concerns over the expansion of tax officials’ powers even as it aims to combat modern tax evasion tactics.

Finance minister Nirmala Sitharaman had introduced the bill, which is currently under review by a select committee, saying it would “simplify” the country’s tax laws.

However, a further examination of the bill has raised questions over individual’s online privacy, according to analysts.

What has specifically raised concerns is a provision in the bill that permits tax authorities to access taxpayers’ digital assets such as emails, social media, bank details, and trading platforms.

Clause 247—a key provision of the bill—grants tax authorities the power to bypass passwords and override security settings to access digital records if they suspect tax evasion or undisclosed assets.

This change is a sweeping expansion of current laws, which allow officers to access physical records but do not explicitly include digital spaces.

“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,” the bill states.

The bill broadly defines “virtual digital space” to include email servers, social media accounts, banking and investment accounts, online trading platforms, cloud storage, and any other digital platforms that store asset-related information.

It allows designated officers, including joint directors, additional directors, and income tax officers, to exercise these powers.

Legal experts have raised questions over the bill’s reach.

“This represents a notable departure from the present Income-tax Act, 1961, which did not explicitly cover such digital domains,” Vishwas Panjiar, a partner at Nangia Andersen LLP, told Reuters. “Without clear safeguards, these extensive powers could lead to taxpayer harassment or unnecessary scrutiny of personal data.”

Other legal professionals have also questioned the provision’s compatibility with privacy rights.

Sonam Chandwani, managing partner at KS Legal and Associates, told The Economic Times that the broad definition of virtual digital space may lead to unrestricted surveillance.

“The expansion of the virtual digital space under the New Income Tax Bill raises significant concerns regarding constitutional validity, potential state overreach, and practical enforcement. While the government may justify it as a measure to curb tax evasion and undisclosed digital assets, the broad and vague definition of VDS essentially allows unrestricted surveillance over an individual’s financial and private digital presence,” Chandwani said.

The broad powers given to tax authorities have raised concerns about data privacy.

Experts have warned that allowing authorities to gain access to personal and financial digital accounts without permission or court approval could weaken trust in India’s digital systems and lead to legal challenges.

The main opposition Congress party said the bill helps tax officials get access to email, social media, and bank accounts of all taxpayers, resulting in India becoming a “surveillance state”.

“Under (Prime Minister Narendra) Modi’s new income tax law, the government is quietly giving tax officials the power to break into your digital life. No warrant, no notice — mere suspicion is enough to strip you of your privacy. This is surveillance. And we must all oppose it unequivocally,” the party said in a post on X.

Padma Shree awardee and former Infosys chief financial officer T.V. Mohandas Pai also called out the government on the proposed changes.

“Your email and social media account can be accessed by income tax officers starting next financial year in these cases -This is an assault on our rights! Government should provide safeguards against misuse, get a court order before this,” Pai posted on X, tagging Prime Minister Narendra Modi.

If approved, the new rules will come to effect from 1 April 2026.