The Lok Sabha has just cleared a sweeping overhaul of India’s income tax law. Officially, it’s called the Income Tax (No. 2) Bill, 2025. In practice, it replaces the bulky, decades-old Income Tax Act of 1961 with something leaner on paper — but with sharper teeth for tax officials.
And here’s the part that’s making headlines: officials can now break into your personal digital accounts during a search. Yes, that includes emails, cloud drives, and even private chats.
A Quick Passage, Little Talk
On August 11, the Bill passed in the Lower House. No debate. Not a single formal discussion on the floor. Opposition MPs were already in full protest mode — though over the special revision of Bihar’s electoral rolls, not the tax bill.
That’s part of what makes this so unusual. Major tax legislation, the kind that affects nearly every taxpayer in the country, sailed through without the usual back-and-forth or amendments from the floor. It’s the kind of thing that tends to leave people wondering if enough eyes really looked at the details.
Slimmed Down — But Only in Words
Finance Minister Nirmala Sitharaman first brought an earlier draft of this Bill in February. That draft was sent to a Select Committee, headed by Baijayant Panda. They submitted their report on July 21. Then, in a slightly rare move, the government withdrew the February version on August 8 and introduced the updated one just three days later.
The numbers are striking. The 1961 Act ran to over 5.12 lakh words. This one? Roughly 2.59 lakh. Chapters have been cut in half — from 47 to 23. Sections: down from 819 to 536.
But there’s an interesting trade-off. While the bulk is trimmed, the new law packs in more tables (from 18 to 57) and far more formulae (6 to 46). So it’s not so much a simple story of “shorter means simpler” — it’s more a case of “condensed, but dense”.
The Digital Door — Now Wide Open
Here’s where things take a turn from “structural reform” into “privacy territory.”
Under the new rules, if officials believe you have relevant records in electronic form, you must help them access it — that means giving them your password or any other access credentials. If you refuse, they can override the access codes themselves.
The law doesn’t mince words here: “override the access code to any computer system, by whatever name called.” It’s a blanket permission. Emails, WhatsApp chats, private cloud folders — nothing is really off the table.
The Select Committee defended this move. They noted that a lot of incriminating material is digital now — messages, shared files, financial PDFs in your inbox. And in their experience, people often just don’t hand over the passwords. This, they say, fixes that bottleneck.
Dissenting Voices and Privacy Red Flags
Still, not everyone on the committee signed off quietly.
Congress MP Amar Singh warned that this gives “very wide-ranging power” to the authorities, enabling them to demand “all types of personal digital data,” not just business records.
N.K. Premachandran from the Revolutionary Socialist Party went even further, calling the provision arbitrary. In his dissent note, he pointed to the Supreme Court’s Puttaswamy judgment, which enshrined the Right to Privacy as a fundamental right. In his view, the 1961 Act’s existing provisions were enough — and these new powers simply risk misuse.
And let’s be honest, “misuse” isn’t a far-fetched fear when it comes to access to someone’s private messages. One wrong step and such powers could be turned against political opponents, business rivals, or just about anyone who becomes inconvenient.
The Enforcement vs. Liberty Tightrope
Supporters of the Bill have a simple argument: tax evaders are no longer hiding ledgers in cupboards — they’re hiding messages in encrypted apps, invoices in private Google Drives, and agreements in email threads. If the law can’t follow the money trail into the cloud, then it’s basically powerless against a modern kind of tax crime.
Opponents, though, are holding the other end of the rope. They say this isn’t just about tax crime; it’s about setting a precedent for how far the state can intrude into your private life. Because once such powers exist, they rarely shrink back — they tend to expand.
It’s a delicate balance, and the Bill has clearly tilted it more towards enforcement. Whether that’s a necessary tilt or an overreach is going to be a debate for courts and civil rights advocates for years to come.
The Strange Absence of a Real Debate
What’s equally striking is the speed. From committee report to final passage, we’re talking just three weeks. And with no floor debate, the Bill has skipped the kind of public scrutiny that helps catch overbroad clauses or unintended loopholes.
That might have been a lost opportunity. Even if the majority in Parliament supports the intent, airing the criticisms openly could have led to built-in safeguards or oversight mechanisms. As it stands, those details will now have to come later — if at all.
What It Means for You
If you’re a taxpayer — and in India, that’s a lot of people — this means digital privacy is no longer a grey zone during an income tax search. Your devices, your online accounts, even your messaging apps could be examined.
It’s not necessarily about having “something to hide.” It’s about recognising that a tax raid now goes well beyond ledgers and balance sheets. For individuals and businesses alike, that’s a shift worth understanding before it’s tested.
Looking Ahead
The Bill now heads to the Rajya Sabha. If it sails through there, the changes could be in place as early as the next financial year. From that point on, any income tax search will operate under these expanded digital powers.
That raises the bigger question — one India will probably keep revisiting: how do you draw a line between effective governance and personal liberty in an era when so much of life is stored online?
For now, that line just moved. And, depending on where you stand, it either moved in the right direction — or dangerously close to the private space every citizen should be able to keep to themselves.
Source: thehindu.com
