The new Income Tax Act, 2025, which has just received Presidential assent, has sparked debate over provisions that allow tax authorities to access digital and social media data of taxpayers during search and seizure operations.
The government, however, has strongly defended the move, calling it an essential tool for tracking undisclosed income in the digital era.
Ramesh Narain Parbat, Member, Central Board of Direct Taxes (CBDT), told CNBC-TV18 that the power is not new, but has now been made explicit and unambiguous in the Act.
“Our search and seizure actions are very limited in number and are initiated only when we have credible information on tax evasion. Increasingly, evidence is stored in the cloud or invested in virtual digital assets. We need access to such data to discover concealed income. A new standard operating procedure for handling digital evidence will be released shortly,” Parbat said.
He clarified that taxpayer confidentiality safeguards remain intact—no authority can disclose information unless permitted under the law. “This is not about mass surveillance. These powers will only be used in exceptional cases of search, seizure and survey,” he stressed.
Simpler law, greater transparency
Beyond the digital powers debate, the government has projected the new Income Tax Act as a landmark reform aimed at making taxation simpler, clearer and more predictable.
- Complicated explanations and archaic words have been scrapped.
- Provisions are written in tabular, plain language.
- The goal, Parbat said, is that “a common assessee should be able to read and understand the law in his own case.”
“This Act will provide more certainty to taxpayers and limit future litigation,” he said.
Litigation and administrative preparedness
The CBDT has acknowledged concerns about the backlog of pending litigations. Parbat assured that the tax administration is “geared up to dispose of cases at the earliest” and expects the clarity of the new law to reduce disputes.
Rules and forms in final stages
To ensure timely rollout, a committee was formed the same day the Bill was introduced in Parliament (February 13) to draft new rules and forms.
- The committee has completed most of the work.
- Thousands of public suggestions have been analysed.
- Draft rules are being vetted by the Tax Policy & Legislation Division before being placed before Parliament.
Parbat said the government aims to finalise and publish the new rules by the end of 2025, well before the Act’s implementation.
Digital-first rollout by Feb 2026
With almost all taxpayer services—return filing, assessments, notices—already online, CBDT is also updating its IT backbone to align with the new law. “Our systems directorates are working in parallel with the rules committee so that by February 1, 2026, when the Act takes effect, the entire digital infrastructure is ready,” Parbat confirmed.
