Union Finance Minister Nirmala Sitharaman has strongly
defended the provisions of the new Income Tax Bill, 2025, emphasizing the
importance of granting tax authorities access to digital records to combat tax
evasion and financial fraud. Addressing the Lok Sabha, she highlighted how
technology, including WhatsApp messages and Google Maps history, has played a
crucial role in uncovering hidden wealth.
Digital Evidence in Tax Investigations
Sitharaman revealed that encrypted WhatsApp messages led to
the detection of over ₹200 crore in unaccounted money linked to crypto assets.
Additionally, tax authorities managed to expose ₹250 crore in undisclosed funds
by analyzing digital communications.
She further explained that digital tools such as Google Maps
history and Instagram accounts have helped identify hidden assets and trace
'benami' property ownership. "Evidence from WhatsApp messages played a
crucial role in detecting ₹200 crore in undisclosed funds. Similarly, Google
Maps history was instrumental in identifying cash hideouts, while Instagram
accounts helped expose hidden property ownership," Sitharaman stated.
Modernizing Tax Enforcement with Technology
The finance minister emphasized that adapting tax
enforcement to new technological advancements is essential to prevent financial
fraud. The rise of virtual digital assets, including cryptocurrencies, has
added complexity to tax investigations, making it necessary for authorities to
access digital communication platforms like WhatsApp, Telegram, and email.
Under the proposed Income Tax Bill, officials will have the
power to access digital communication and business software used to conceal
financial transactions. "Gathering evidence from digital accounts is not
only necessary to prove tax evasion but also to accurately assess the amount of
tax that has been evaded," she added.
Key Provisions of the Income Tax Bill, 2025
The new bill, introduced in the Lok Sabha on February 13,
seeks to replace the Income Tax Act of 1961. While many provisions from the
existing law remain unchanged, the primary aim is to simplify the language and
remove outdated sections.
A significant update in the bill is the inclusion of virtual
digital assets under the definition of undisclosed income. This expands tax
coverage to include cryptocurrencies, digital tokens, and other
blockchain-based assets. Additionally, tax authorities will have the power to
access virtual digital spaces during search and seizure operations. This means
officials can inspect email servers, social media accounts, online trading
platforms, and websites storing asset ownership details. They will also be able
to override access codes to gather necessary evidence for tax investigations.
Controversy and Legal Concerns
The bill's provisions allowing tax officials to access
personal digital data have raised concerns about privacy and potential misuse
of power. Critics argue that allowing authorities to override digital access
codes could lead to breaches of confidentiality and misuse of data. However,
the government maintains that such measures are necessary to keep up with the
evolving methods of tax evasion.
Conclusion
With financial transactions increasingly shifting to the
digital space, the new Income Tax Bill, 2025, aims to equip authorities with
the necessary tools to track and combat tax evasion effectively. While concerns
about privacy persist, the government insists that these measures are crucial
to maintaining financial transparency and ensuring that tax evaders do not
exploit digital loopholes. As the bill moves forward for further discussions,
its potential impact on digital privacy and financial regulation remains a
topic of debate.