The Parliamentary Select Committee appointed to review the new Income Tax Bill 2025 proposed by the government has retained the provisions in the new Bill empowering tax officials to access, forcibly if necessary, the social media and private emails of people they are conducting search and seizure operations on.
The Income Tax Bill 2025 was introduced in the Lok Sabha in February 2025. The aim behind the Bill, as per the government, is to simplify and rationalise the existing Income Tax Act 1961 and the numerous amendments that have been made to it over the decades since it was introduced. It was then sent to a Select Committee, chaired by Baijayant Panda, for a review.
The government on Monday (July 21, 2025) tabled the 4,575 page report in the Lok Sabha.
The new Bill’s expanded scope of powers given to tax officials during search and seizure operations has drawn criticism and calls for change, including from the experts the Select Committee consulted during its review.
Stricter searches
According to the new Bill, if a person is found to be in possession or control of any books of account, or other documents and information maintained digitally, on computer systems, or stored electronically, then they must provide the designated income tax officer “reasonable technical and other assistance (including access code, by whatever name called) as may be necessary” to enable the officer to inspect “any information, electronic records and communication or data contained in or available on such computer systems”.
Further, the Bill also says that the authorised officer can gain access to these electronic systems by “overriding the access code to any said computer system, or virtual digital space, where the access code thereof is not available”.
A ‘virtual digital space’ includes social media accounts, online investment accounts, trading accounts, bank accounts, remote server or cloud server, and digital application platforms.
According to the report, the stakeholders the Committee consulted during its examination of the Bill raised red flags regarding these provisions.
Changes “not feasible”
The stakeholders suggested that the power to gain the access codes of social media accounts be placed out of the purview of relevant sections of the new Bill. They also stated that the Bill should make clear that, if access is gained to personal email addresses and computer systems, the use of these accounts “shall be made only to the extent it is relevant for Income-Tax Act and not for any purpose beyond the Income-tax Act”.
Others suggested that “tangible reasons for seeking access may be recorded in writing prior to any such activity being undertaken”.
The Select Committee, however, has argued that the provisions in the new Bill are necessary and therefore suggested no changes to them.
“Various incriminating evidences and material are found/seized from electronic records including WhatsApp communications, emails, etc,” it said in its report. “In most of the cases of search operation the taxpayers do not share the password/login credential of online forums/portals/e-mail accounts, etc.
“This is because various encrypted communication modes are being used by tax payers to communicate and discuss their unaccounted transactions,” it added. “The amendment has been rightly made to rationalise the provisions. Thus, the suggestion is not feasible.”
With regard to the stakeholders’ suggestion that tangible reasons for providing access be provided, the Committee said this was “not feasible” as it “seeks to provide safeguard in the statute to prevent abuse of power by Revenue officials as well as protect the privacy of taxpayers”.
Significant simplification
According to the Committee’s report, the new Bill is a big step forward in simplifying India’s income tax legislation. The new Bill has pared down the number of words in the law to 2,59,676 from the 5,12,535 in the Income Tax Act 1961.
The number of chapters have also been reduced to 23 from 47, and the number of sections have been slashed to 536 from 819. On the other hand, to provide greater clarity, the new Bill has increased the number of tables it incorporates to 57 from 18, and the number of formulae to 46 from 6.
“The language has been simplified making the document easy to read and understand,” the Committee’s report noted. “The drafting style of the new Bill is straightforward and clear, making the provisions easier to understand.”
Redundancies and need for cross-referencing between Sections and Chapters have been eliminated,” it added. “Greater clarity has been brought in the Act without any structural or policy changes and without disturbing the long-settled taxation principles.”
Published – July 21, 2025 02:37 pm IST
