The Indian government has introduced a finance bill for 2025 expanding tax authority in the digital space. This will grant tax officials access to encrypted digital data starting in 2026.
Expanded Powers for Tax Authorities
The Finance Bill 2025 grants tax officers extended powers for tax-related investigations, including access to password-protected files and cloud storage. The new provision enables tax authorities to access encrypted digital data under investigation for tax fraud and undisclosed resources.
Enhanced Capabilities for Digital Investigations
The new law allows investigations into digital assets and financial transactions, including decrypting secured data. This helps uncover hidden digital assets and cryptocurrency transactions. Experts express concerns over these powers and potential misuse.
Parliamentary Review and Implementation Timeline
On March 25, the Lok Sabha passed the bill with amendments. The Rajya Sabha will review the bill. Digital surveillance provisions will start on April 1, 2026, after legislative review by the monsoon session.
India's expansion of tax authority to access digital data requires careful assessment and implementation of adequate safeguards.
