So far, income tax authorities had the power to conduct searches and seize assets and books of accounts if they had reason to believe that an individual was evading taxes. The new I-T bill extended this power to the "virtual digital space".

Starting April 1, 2026, income tax authorities will be able to access and scrutinise every person’s social media accounts, personal emails, bank accounts, online investment accounts, trading accounts and more.

Authorities will be able to override access to digital platforms if they suspect that the individual has evaded income tax or if they have reason to believe that the person has any undisclosed income, money, gold, jewellery or valuable item or property on which the applicable income tax has not been paid as per the Income Tax Act, 1961. 

As per Section 132 of the existing I-T Act, 1961, so far, income tax authorities had the power to conduct searches and seize assets and books of accounts if they have information and reason to believe that an individual has any undisclosed income, property, or documents that they are hiding to evade taxes.

This allowed them to break open the lock of any door, box or locker in case their keys are unavailable and if they have a reason to suspect that any undisclosed assets or books of accounts were being kept there.

However, the new I-T bill extended this power to a citizen’s mobile phones and computer systems, under what they called the “virtual digital space”.

The powers mentioned under Section 247 of the Income tax Bill 2025 state:

“…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 new bill goes on to define “virtual digital space” as follows:

“An environment, area or realm, that is constructed and experienced through computer technology and not the physical, tangible world which encompasses any digital realm that allows users to interact, communicate and perform activities using computer systems, computer networks, computer resources, communication devices, cyberspace, internet, worldwide web and emerging technologies, using data and information in the electronic form for creation or storage or exchange.”

These include email servers, social media accounts, online investment accounts, trading accounts, banking accounts, etc., any website used for storing details of ownership of any asset, remote server or cloud servers, digital application platforms, and any other space of similar nature.

Cause for concern?

What is not defined in the Act is the extent of the “reason to believe” of authorities. This means that income tax officers could override access to “any said computer system, or virtual space” on mere suspicion of tax evasion.

As a result, it has led to concerns regarding digital privacy of users. “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! Govt should provide safeguards against misuse, get a court order before this,”?

~Navneet Shukla