New Delhi. The method of tax investigation in India is going to change completely soon. Under the proposed Income Tax Bill 2025, which will come into effect from April 1, 2026, the Income Tax Department will also be able to conduct investigations in the digital world. This means that now not only home, office or locker, but also bank accounts, emails, social media and online investment platforms can come under scrutiny. The government is calling it a need of the digital age, while common taxpayers have many questions regarding it.
What is the new income tax provision
Till now the Income Tax Department has the right to search and seize under Section 132 of the Income Tax Act 1961. Under this, cash, jewellery, documents or other physical assets are examined. But the new Income Tax Bill 2025 is going to digitalize this system. In this, ‘virtual digital space’ has also been included in the scope of search.
Which digital platforms will you get access to?
Under the new law, Income Tax officials will be able to investigate digital mediums like email accounts, social media profiles, cloud storage, online banking, digital wallets, crypto and share trading platforms. In simple words, now along with cupboards and lockers, inbox and digital dashboard can also be checked.
Why is the government making this change
The government argues that today most of the transactions have taken place online. Many information related to black money, foreign investment, crypto assets and online business remains available in digital form only. In such a situation, it has become difficult to detect tax evasion just by physical search. Through digital investigation, the government wants to curb new methods of tax evasion.
Will officials be able to see the account without any reason?
The answer to this question is- no. The new law does not give arbitrary leeway to officials. It will be necessary to have a ‘reasonable reason’ for any digital investigation. Just as grounds for suspicion are recorded in a physical search, similarly for a digital search also the reason will have to be recorded in writing. This means that everyone’s account will not be opened just like that.
Why are questions being raised regarding privacy?
Although conditions have been laid down in the law, critics say that access to email and social media is a sensitive matter related to individual privacy. If clear guidelines and monitoring system are not in place, the possibility of its misuse cannot be ruled out. Especially concerns are being raised regarding private chats and messages.
What will be the impact on common taxpayers?
Those paying taxes honestly need not worry. The biggest protection is to declare the correct income and follow the rules. But if a person is suspected of tax evasion, officials can check his online transaction history, emails and digital assets. Therefore, it has now become necessary to keep digital records as seriously as paper documents.
