Select Committee of Parliament has backed the controversial digital search and seizure provisions in the new Income Tax Bill, 2025.
Despite ongoing concerns around privacy breaches, the committee recommended no major changes to the clause.
The 4,575-page report, presented in the Lok Sabha on Monday, clears the way for stronger powers to override digital protections and access social media content during tax investigations.
Provisions Echo 1961 Act, Says Committee
The House panel, headed by BJP MP Baijayant Panda, asserted that the clause was “adequate” and consistent with Section 132 of the Income Tax Act, 1961.
Only minor drafting corrections were suggested.
The clause in question grants tax authorities sweeping powers for digital search and seizure. Furthermore, this includes access to locked devices and encrypted content.
The report states that these powers are vital to countering sophisticated tax evasion tactics in the digital age.
Ministry Defends Right to Limited Privacy
Amid concerns about misuse, the Finance Ministry clarified its position on privacy.
It stated that the right to privacy is not absolute.
According to the ministry, it can be curtailed based on a legitimate state aim, necessity, and proportionality. These three principles align with the Supreme Court’s landmark privacy ruling in the Puttaswamy judgment of 2017.
Officials maintain that the Income Tax Bill provisions follow these standards strictly.
Opposition Voices Concerns, Demands Safeguards
Opposition members in the panel raised strong objections.
They argued that unchecked digital access could lead to overreach and violate citizens’ fundamental rights. Also, they demanded clearer guidelines on how data will be accessed, stored, and protected.
However, their suggestions were not incorporated into the final draft of the committee’s recommendations.
This disagreement has intensified debate over the bill’s implications for data privacy and civil liberties.
Digital Search Powers Explained
Under the proposed framework, tax officials may:
- Override passwords and encryption codes
- Access mobile apps and cloud storage
- Review social media communications
- Clone digital devices for investigation
These tools are aimed at keeping pace with the evolving methods of concealing assets and income online.
Experts argue that tax evaders increasingly use VPNs, hidden accounts, and anonymous apps—necessitating advanced investigative authority.
Call for Transparency and Oversight
Several legal experts have flagged the need for independent oversight. Further, they argue that without proper checks, digital search powers can be abused.
Civil society groups have also expressed fear over lack of safeguards, especially in the absence of a dedicated data protection law.
India’s Digital Personal Data Protection Act, 2023 is yet to be fully operational.
This legislative gap further complicates the debate on digital surveillance and tax enforcement.
Broader Context: Shift to Digital Governance
The 2025 Income Tax Bill is part of the government’s plan to modernize India’s tax ecosystem.
It replaces the outdated 1961 Act and aims to streamline tax administration using technology.
The new provisions mirror a broader global trend.
Countries like the US, UK, and Australia have already empowered their revenue departments with similar tools to crack down on digital tax fraud.
To learn more about the ongoing changes in India’s taxation system, visit the Ministry of Finance website and refer to the Parliamentary updates for access to the full report.
Balancing Enforcement with Rights
The decision to retain the digital search and seizure clause in the Income Tax Bill 2025 highlights a pressing dilemma.
While tax compliance must evolve with digital times, it cannot come at the cost of citizen rights.
With no major revisions, the bill is now set for a heated debate when tabled for final approval in Parliament.
As India prepares for a tech-driven fiscal framework. Nevertheless, it must ensure that transparency, accountability, and privacy remain at its core.