Tax Authorities to Gain Access to Taxpayers' Digital Accounts Under New Rules Starting Next Year

The revised Income Tax Bill has introduced provisions allowing tax authorities to access taxpayers' digital footprints, including emails and social media accounts. This policy change is set to take effect on April 1, 2026, significantly expanding the investigative powers of income tax officers.

Enhanced Authority for Tax Officials

Under the current regulations, tax officers already possess the authority to conduct physical searches and seize assets in cases of suspected tax evasion. They can access locked storage spaces, safes, and other secured belongings. However, the new bill extends their reach to digital domains, permitting officials to examine online financial accounts, emails, and trading platforms when investigating potential tax fraud.

Inclusion of Virtual Digital Space in Investigations

The updated bill explicitly defines virtual digital space to encompass social media platforms such as Facebook, WhatsApp, and Instagram, as well as taxpayers’ email accounts and online banking portals. Additionally, tax officers will have access to cloud storage and other digital financial platforms as part of their scrutiny.

Digital Scrutiny to Strengthen Compliance

Tax experts believe that expanding the powers of tax officers to include digital investigations will enhance compliance and curb illicit financial activities. The ability to access digital accounts without requiring passwords will allow for more thorough investigations. However, experts also suggest that taxpayers can avoid intrusive probes by proactively providing all necessary financial information upon request.

Parliamentary Review and Implementation Timeline

The proposed Income Tax Bill is currently under review by the Parliamentary Standing Committee on Finance. Following necessary amendments based on committee recommendations, the government is expected to implement the new tax regulations starting April 1, 2026.