The new income tax bill has been making headlines, but not for reasons taxpayers would appreciate. While the government claims it's meant to simplify tax laws, hidden within the bill is a clause that gives tax authorities broad powers. This allows them to search through emails, trading accounts, social media profiles and other personal information during tax investigations.

Finance Minister Nirmala Sitharaman presented the new Income Tax Bill, 2025, in Parliament, calling it a major update to the tax system that has been in place for over 60 years. However, before it becomes law, a select committee will review it. The main concern is a clause that broadens the scope of tax searches to include “virtual digital spaces,” which were not covered earlier. Currently, tax officers can request access to laptops, hard drives and emails, but since the law doesn’t specifically mention digital records, such demands often get challenged legally. The new bill changes that—now, tax authorities will have the clear right to access digital assets. If a taxpayer refuses, they can bypass passwords, override security settings, and unlock files.

According to clause 247 of the new income tax bill, starting April 1, 2026, designated income tax officers in India will have the authority to access your bank account information, investment accounts, social media accounts and emails in certain circumstances if they suspect tax evasion or undisclosed assets on which taxes have not been paid. “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.” To put it simply, officers will have unrestricted authority over anything kept in a taxpayer's "virtual digital space," which the bill defines as any platform that enables computer-based interaction, such as social media, cloud servers, email accounts,and trading platforms.

Legal experts are concerned. Vishwas Panjiar, a partner at Nangia Andersen LLP, told Reuters that this marks a big change from the current Income-tax Act of 1961. He cautioned that without strong safeguards, these new powers could result in harassment and excessive scrutiny of personal data. “This represents a notable departure from the present Income-tax Act, 1961, which did not explicitly cover such digital domains,” Panjiar said. “Without clear safeguards, these extensive powers could lead to taxpayer harassment or unnecessary scrutiny of personal data.” Sanjay Sanghvi, a partner at Khaitan & Co, explained that tax authorities have asked for access to digital devices in the past, even though the law didn't clearly allow it. The new bill removes this uncertainty and makes it mandatory for taxpayers to provide access.