The Income Tax Bill 2025 has ignited widespread concern over its provisions for digital search and seizure, which allow tax authorities to override passwords and encryption on social media, messaging apps, and emails. The move aims to curb tax evasion in the digital age, but critics argue it threatens individual privacy rights.
A Parliamentary Select Committee, headed by Baijayant Panda, reviewed stakeholder feedback and upheld these powers, recommending only minor drafting changes. The committee deemed the provisions consistent with the Income Tax Act of 1961, rejecting suggestions to limit digital access or exclude certain platforms.
The Ministry of Electronics and Information Technology clarified that tax authorities will act as data fiduciaries under the Digital Personal Data Protection Act, imposing obligations to protect and limit the sharing of personal data. Meanwhile, the Law Ministry emphasized that privacy can be curtailed for legitimate state interests like crime prevention and national security.
Other key recommendations included removing mandatory tax return filing for TDS refunds, easing the burden on small taxpayers, and restoring exemptions for anonymous donations to religious and charitable trusts.
As the government modernizes tax enforcement, the challenge remains to balance digital transparency with citizen privacy and legal safeguards.
