India Expands Tax Authority Over Digital Accounts in Finance Bill 2025
India’s Finance Bill 2025 grants tax officials access to digital accounts and encrypted data to detect tax evasion and undisclosed assets.
- India’s new tax bill lets officials access encrypted digital data.
- Authorities can retrieve records from cloud storage and chat apps.
- Digital asset surveillance starts April 1, 2026, after review.
The Indian government added new provisions to the Finance Bill 2025 to improve national regulations about monitoring digital assets together with financial transactions. According to Finance Minister Nirmala Sitharaman the lacking legal basis in the past Income Tax Act for digital asset investigations made the new bill include specific measures.
The new bill grants authority to tax departments which allows them to examine information on digital platforms between emails, WhatsApp, Telegram and cloud storage alongside enterprise software to detect undisclosed financial dealings. The new measure focuses on tax compliance through technology advances by preventing the hiding of virtual digital assets including cryptocurrencies transactions. Tax officials will have the power to obtain digital evidence from accounts that reveals tax evasion patterns and establishes accurate amounts of unpaid taxes.
Expanded Powers for Tax Authorities
The Finance Bill 2025 authorizes tax officers to exercise extensive investigative powers which break through digital security protocols in tax-related investigations. The provisions of Clause 247 authorize income tax officers to break password protection and access all locked digital files and storage including social media platforms trading sites and cloud service providers. The authorities can implement this provision during their investigations of tax fraud along with suspected undisclosed resources.
According to the new law officials gain permission to search digital record storage sites including the authority to break open locked doors. Under this change in taxation regulations physical books of accounts and manual records no longer serve as the primary focus. The new bill brings digital records under clear legal recognition which achieves taxation compliance by closing down previous legal loopholes.
Counselors specializing in legal matters express fear about these wide-reaching powers because they lack adequate protection which creates the possibility of unethical data investigations. The potential misuse of these tax powers concerns industry professionals while they demand protective mechanisms to stop harassment of taxpayers.
Parliamentary Review and Implementation Timeline
On March 25 the Lok Sabha enacted the Finance Bill 2025 with 35 government amendments that removed the digital tax for online ads which originally stood at six percent. The Rajya Sabha must now conduct a review of the bill which will lead to final passing of the legislation.
The Digital Asset Surveillance provisions established under the law will be enforced starting April 1, 2026. A select committee will inspect the bill for accommodating concerns from multiple stakeholders when they review the policy before implementation. The committee established to review this bill must finish compiling its report before the beginning of the Monsoon Parliament Session.
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