Context:
The proposed Income-Tax Bill, 2025 seeks to significantly expand the search and seizure powers of tax authorities by extending them from physical premises to an individual’s “virtual digital space”. This move has triggered serious debates around privacy, proportionality, executive overreach, and absence of judicial safeguards, especially in the digital era where personal and professional lives are deeply intertwined.
Key Highlights:
Policy / Legal Provisions:
- The Bill expands Section 132–type powers (earlier limited to physical locations) to include:
- Emails and cloud storage
- Social media accounts
- Encrypted communication applications
- Any other “space of similar nature”, making the scope open-ended.
- Authorities are empowered to override access codes and passwords, enabling direct access to electronic devices.
Nature of Expansion:
- Shift from place-based searches to data-based searches, exponentially increasing the volume, sensitivity, and intimacy of information accessed.
- Digital searches can inadvertently capture third-party data unrelated to tax evasion.
Concerns for Professional Confidentiality:
- Professions such as journalism, law, healthcare, and activism face heightened risks.
- Access to devices may expose sources, client communications, medical records, and unpublished material, creating a chilling effect on free expression.
Judicial Context:
- The Supreme Court (2023) issued interim guidelines on digital seizure, stressing the need for:
- Clear protocols
- Judicial safeguards
- Despite this, the Bill continues the practice of non-disclosure of “reason to believe”, undermining transparency and accountability.
Relevant Prelims Points:
- Issue: Expansion of tax search powers into digital space.
- Causes:
- Growing digitisation of financial transactions.
- State emphasis on tackling tax evasion using technology.
- Government Action:
- Proposed Income-Tax Bill, 2025.
- Benefits Claimed:
- Enhanced enforcement capability.
- Ability to detect concealed digital financial trails.
- Challenges & Impact:
- Risk of mass data intrusion.
- Exposure of irrelevant and third-party information.
- Potential violation of right to privacy (Article 21).
- Weakening trust between citizens and the state.
Relevant Mains Points:
- Constitutional & Legal Framework:
- Right to Privacy recognised as a fundamental right in Justice K.S. Puttaswamy (2017).
- The Court laid down a four-fold test for restricting privacy:
- Legality
- Necessity
- Proportionality
- Least intrusive means
- The proposed provision fails to meet proportionality and least-intrusive standards.
- Comparative Jurisprudence:
- Canada: Section 8 of the Charter mandates strong privacy protections against unreasonable searches.
- USA: Riley v. California (2014) requires warrants for digital searches due to data sensitivity.
- India’s Bill lacks warrant-based or relevance-based safeguards.
- Governance and Democratic Concerns:
- Absence of prior judicial oversight makes digital search an executive-driven process.
- Normalisation of surveillance risks erosion of digital freedoms and democratic norms.
- Sets a precedent for other enforcement agencies to seek similar unchecked powers.
- Way Forward:
- Narrow and precise definition of “virtual digital space”.
- Mandatory judicial warrants for accessing digital and encrypted data.
- Disclosure of reasons and post-search review mechanisms to ensure accountability.
- Stakeholder consultation with civil society, privacy experts, journalists, and digital rights groups.
- Development of clear digital search protocols aligned with constitutional principles.