India’s Income Tax Department is set to gain new authority to monitor individuals’ digital activities, including social media accounts, emails, and online financial transactions, starting from April 1, 2026, as per the proposed Income Tax Bill. This move aims to strengthen the department’s ability to detect tax evasion and undisclosed assets, including cryptocurrency holdings.
Under Clause 247 of the bill, tax officers will have the power to access digital platforms if they suspect tax evasion. This includes the ability to override passwords and access codes to computer systems and virtual digital spaces when necessary. The objective behind this measure is to modernize tax investigations in line with the increasing digitalization of financial transactions, utilizing digital forensics to trace undisclosed income.
While this development is seen as a positive step towards combating tax evasion, privacy concerns have been raised by experts. They fear that the broad powers granted to tax officials could potentially lead to misuse and violations of privacy rights. To address these concerns, the bill is currently under review by a select committee, which will engage with stakeholders before finalizing the legislation.
It is important to strike a balance between strengthening tax enforcement and protecting individuals’ privacy. The Income Tax Department must ensure that the new powers are used responsibly and with proper oversight. By leveraging digital forensics, the department can effectively identify tax evasion and undisclosed assets, including those held in cryptocurrencies.
As the digital landscape continues to evolve, it is crucial for tax authorities to keep pace with technological advancements. Monitoring individuals’ digital footprints can provide valuable insights and help detect potential tax evasion. However, it is equally important to safeguard privacy rights and ensure that the powers granted to tax officials are not abused.
In conclusion, the proposed Income Tax Bill aims to empower the Income Tax Department to monitor individuals’ digital activities, including cryptocurrency holdings, starting from April 2026. This move is intended to enhance tax enforcement efforts and detect undisclosed assets. While privacy concerns have been raised, the bill is currently undergoing review to address these issues. Striking the right balance between tax enforcement and privacy protection is crucial in the digital age.
