No excessive powers to tax officials under new law: Govt

Amidst the concern over power being given to tax officials to access digital accounts of people under the new Income Tax Act, the Finance Ministry has clarified that these are not “excessive powers” and will only be used when the department has “complete evidence or information tax evasion”.

In an interview to The Tribune, RN Parbat, Member (Legislation) at CBDT, on Monday said the authority would provide SOPs for handling of digital assets that were seized.

To educate taxpayers, the CBDT planned to issue FAQs, guidance notes and a mapping of old and new provisions, as announced by the Finance Minister, Parbat said, adding that these steps were aimed at dispeling apprehensions.

The Income Tax Act, 2025, set to replace the six-decade-old Income Tax Act of 1961, has ignited concerns over the expanded powers granted to tax authorities, particularly regarding access to digital assets. The new legislation that will take effect from April 1, 2026, is aimed at simplifying India’s tax system but has raised apprehensions about privacy and overreach. The Act allows tax officials to access “virtual digital spaces”, including WhatsApp, emails, social media accounts and crypto currency wallets, during search and seizure operations.

“These are not excessive powers. These are the powers required to enforce the law. These powers were already there. ...We have given it more clear text in the Act. These actions take place only when we have complete evidence of or information of tax evasion. It is only then that we take these actions. Such actions are not common. So, it's not that every common tax assesee will have some issues due to this. Only the persons who are found to be evading taxes will be affected,” Parbat said.

He said, “See, search and seizure take place to uncover undisclosed income. So, undisclosed income can be found recorded in duplicate sets of books of the accounts or records, which are being kept on cloud or online... So we need access to that. Similarly, undisclosed income is invested in virtual digital assets also. So in order to seize them, in order to realize taxes out of them, we need to have access to them.”

“Many redundant provisions are there that are no longer under use. So, those were identified and separated, then the language used was typical legal language. It was very difficult for commoners to understand. Whereas our income Tax Act touches the life of everybody in the country. We formed the entire Act in a simple language.”

Addressing concerns about accountability, he said tax officials remained fully accountable. “As far as accountability is concerned, I assure you that tax officials are totally accountable for their duties and whatever duties have been provided to them in the Act, they work accordingly within the limit of it,” he said.