Union Finance Minister Nirmala Sitharaman on Tuesday (March 25) defended provisions in the proposed Income Tax Bill, 2025, which expand tax authorities’ powers to access digital records, citing their effectiveness in unearthing major financial frauds and tax evasion.
Speaking in the Lok Sabha, Sitharaman said that encrypted WhatsApp messages, Google Maps location data, and Instagram profiles have helped authorities uncover ₹200 crore in unaccounted money linked to crypto assets. She also revealed that encrypted messages from mobile phones led to the discovery of unearthing ₹250 crore in unaccounted money, while Instagram accounts were used to trace ‘benami’ property ownership, and Google Maps helped track suspicious movements.
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Digital evidence is key
The Finance Minister argued that giving officials access to digital platforms like WhatsApp, Telegram, and emails is essential in a tech-driven world. “The Income Tax Law earlier lacked legal backing to check digital assets. This has now been addressed in the new bill,” she said.
She stressed that collecting evidence from digital accounts is important to prove tax evasion in court and to calculate the exact amount of tax evaded.
The proposed law empowers tax officials to override passwords and encryption barriers to retrieve data from communication apps, cloud storage, business software, and other digital environments during search and seizure operations. Sitharaman explained that under the current 1961 Act, accessing such data required multiple layers of approvals, slowing down investigations.
Legal backing needed
Sitharaman emphasised that without formal legal backing, even solid digital evidence can be dismissed in court. “If we don’t amend the law, clear proof of tax evasion can go unpunished,” she said.
Another significant change allows for immediate attachment of properties during raids — without prior notice — for up to six months. The bill also includes virtual digital assets, such as cryptocurrencies, within the definition of undisclosed income, expanding the scope of enforcement.
Proposed changes
Introduced on February 13, the Income Tax Bill, 2025 aims to replace the six-decade-old Income Tax Act of 1961. While preserving key provisions, the new bill simplifies language, removes outdated clauses, and aligns India’s tax framework with the demands of a digitally-driven economy.
Currently being reviewed by a parliamentary committee, the bill is expected to streamline compliance, enhance investigative capabilities, and help tackle evolving forms of financial concealment and tax fraud.