New Income Tax Bill Empowers Officers to Access Social Media Chats to Uncover Hidden Crypto Assets

New Income Tax Bill Empowers Officers: The central government has been persisting in its argument that the new income tax bill is mainly aimed at simplifying the tax laws. However, the new bill is once again being talked about for one disquieting provision which grants tax authorities the powers to inquire into taxpayers' personal details like their e-mails, social media profiles, and trading accounts during tax investigations.

The most controversial is a specific clause regarding "virtual digital spaces," the media reported. The media reports state that under the new bill, tax authorities will demand access to digital assets, and if a taxpayer denies them, the authorities can follow that with an invitation to the bypassing of passwords, overriding of security settings, and unlocking of files. For the time being, tax officers can seek access to laptops, hard drives, and emails; however, the current tax law does not explicitly provide for the digital arena, much to their chagrin when this was legally challenged.

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Clause 247 of the new income tax bill states that qualified income tax officers in India will henceforth be permitted access to emails, social media accounts, bank details, and investment accounts of individuals, in special cases, starting 1 April 2026, if tax evasion or undisclosed assets on which due tax is unpaid are suspected.

“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,” read the clause.

In layperson's terms, the new regulation allows officers into a taxpayer's "virtual digital space." This incorporates any platform on which users communicate via computers, such as cloud storage, email, social media, and online trading platforms.

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New Income Tax Bill: What Experts Are Saying?

Alarm bells have been sounded by experts over the fresh rule. Vishwas Panjiar, of Nangia Andersen LLP, told Reuters, marking the transition of this provision as an extreme change from the existing tax law. He fears that in absence of appropriate safeguards, the tax authorities may misuse the newfound power. This may lead to harassment and unwarranted camping on privacy.

However, Sanjay Sanghvi, a partner at Khaitan & Co, said it was previously the case that tax authorities would ask to access digital devices, but it was never explicit in law that they could; so there was a gray area. The new bill takes away this gray area and basically says that taxpayers are required to allow access, therefore closing the loophole.

“This provision will bring clarity, but it has a concerning aspect: allowing any Income Tax officer to access emails or social media accounts. To address this, the provision should be amended to require permission from higher authorities, such as Joint Directors or Additional Directors, before accessing private information. Additionally, I strongly believe that taxpayers’ social media accounts should be off-limits for scrutiny, as it’s an invasion of their privacy,” Chartered Accountant Kamal Agarwal said to News24.

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