New Income Tax Bill allows access to tax payer’s digital records, breaching privacy

New Delhi: The new Income Tax Bill that finance minister Nirmala Sitharaman introduced in the 2025 Union budget claiming to ‘simplify’ things could lead to full access to a taxpayer’s digital records, Siasat reported citing experts.

At the time of introducing the new bill, a revamp of the Income-tax Act, 1961, Nirmala Sitharaman said that the revised Income Tax Bill comes with ‘illustrative examples to aid understanding’.

Presenting the 2025 Union budget in the Lok Sabha, she made it clear: ‘The revised Income Tax Bill is expected to be clear, concise, consistent and supplemented with illustrative examples to aid understanding and interpretation by various stakeholders, which will also eliminate obsolete and redundant provisions, according to industry experts’.

Despite stating the aim to ‘modernise and simplify India’s tax system’, the revised version of the Income Tax Bill, ready to implement from April 2026, reportedly contains potential risks.

It is reported citing experts that tax officers will get full access to a taxpayer’s digital records.

The clause 247 of the new version reportedly will allow designated income tax officers in India, if they suspect tax evasion or undisclosed assets, to ‘access your emails, social media, bank details, and investment accounts, in certain cases, starting April 1, 2026’.

In the event of taxpayer refusing authorization to their digital records, officers can bypass passwords to unlock files, overriding security settings.

Vishwas Panjiar, a partner at Nangia Andersen LLP, pointed out that the new Income Tax Bill could ‘infringe personal data’, according to the report.

‘This represents a notable departure from the present Income-tax Act, 1961, which did not explicitly cover such digital domains. Without clear safeguards, these extensive powers could lead to taxpayer harassment or unnecessary scrutiny of personal data,” Reuters quoted Panjiar as saying.