New Delhi – From April 1, 2026, income tax officers in India will get new powers to look into people’s digital accounts during searches. This comes under the Income Tax Act, 2025, which replaced the old 1961 law. The key part is Section 247, earlier called Clause 247 in the bill. It lets officers access emails, social media, cloud storage, online bank accounts, trading platforms, and digital wallets if they think someone is hiding income.
The government says this change is needed because more money matters happen online now, like crypto trading and digital payments. Officers can ask for passwords or break into accounts if people do not share them, just like they can break locks in physical searches. But this will happen only in special search cases, not for everyone filing normal returns.
Tax officials say fears about privacy are too much. They point out that searches are rare – only 100 to 200 big ones happen each year, mostly for people suspected of big tax evasion. CBDT Chairman Ravi Agarwal has said in the past, “These powers are only for search cases where people hide information. It is not for checking common taxpayers.”
What the New Law Says
The Income Tax Act, 2025, was passed by Parliament in August 2025 and got President’s assent soon after. It starts from April 1, 2026. Section 247 updates the old Section 132 rules for search and seizure.
Under the new rules, if a senior officer has “reason to believe” that someone has hidden income or assets, they can authorise a search. This includes:
- Entering homes, offices, vehicles, or any place.
- Asking for books, documents, cash, jewellery.
- Now, also checking computers, phones, and “virtual digital spaces”.
Virtual digital space means any online area like email servers, social media accounts, cloud drives, online banking, or apps where money details might be kept.
If the person does not give passwords or access, officers can override them to get in. They can copy data or seize devices.
The law says officers must record reasons for the search. Higher approval is needed in some cases. Data found is presumed true unless proved wrong.
Why This Change Was Made
India’s economy is going digital fast. People use UPI, online trading, crypto, and foreign apps for money. Old laws were good for physical cash or papers but not for digital hiding.
Government wants to catch black money in crypto or overseas accounts. Virtual digital assets like crypto are already taxed at 30 percent, but some hide them.
Finance Ministry sources say this just makes clear what officers could already do with computers during raids. It brings the law up to date with technology.
A senior official said, “No new big power is added. It is just written clearly for digital things. Searches need strong reasons and approval.”
Privacy Worries from Experts and Groups
Many people and groups are worried about privacy. The Supreme Court said in 2017 that privacy is a basic right. Any rule limiting it must be fair, needed, and not too much.
Privacy groups like Internet Freedom Foundation wrote to Parliament committee. They said there are no strong safeguards. No need for court order before digital search. Officers can see personal chats, photos, or unrelated things.
One expert, Vishwas Panjiar from a big law firm, said, “This is a big change. Without clear rules, it can lead to trouble for taxpayers or checking personal data not needed.”
Some compare it to other countries. In USA or UK, tax officers need court warrants for deep digital checks. In India, it is internal approval.
Legal writers say it might go against Digital Personal Data Protection Act, 2023, which protects personal data.
Human rights groups call for limits – like searching only money-related folders, or deleting unrelated data after.
How Searches Work Now
Income tax searches are not common. Most people never face one. They happen when there is tip-off or data mismatch showing big hidden income.
In a search:
- Team comes with warrant.
- They seal places, ask questions.
- Take documents or assets.
- Now, they can clone phones or laptops, access cloud.
After search, person gets chance to explain. If hidden income found, high tax plus penalty.
Family members or staff must help, or face fine.
What Taxpayers Can Do
Experts say honest taxpayers have nothing to worry. File returns correctly, keep records.
If search happens:
- Cooperate but ask to see warrant.
- Note what is taken.
- Get lawyer help.
Many say keep personal and money data separate if possible.
Views from Different Sides
Government side: “This stops clever evasion in digital age. Safeguards are same as old law, which courts approved.”
CBDT has said fears are “fear mongering”. Powers only for serious cases.
Privacy side: “Need judicial oversight. Broad definition can cover private life.”
One lawyer said, “Balance needed between tax collection and rights.”
Some MPs in committee suggested changes, but final law kept the powers with some clarifications.
What Happens Next
The new Act is simpler overall, with fewer pages. Tax rates same, but some relief in slabs.
From April 2026, guidelines may come on how digital searches done.
Courts may get cases challenging the section.
As India goes more digital, this law shows shift in how government checks taxes.
Frequently Asked Questions (FAQs)
What is the new digital search power in income tax?
From April 1, 2026, under Section 247 of Income Tax Act 2025, officers can access emails, social media, cloud, online banks during authorised searches if they suspect hidden income.
Will tax officers check my emails or social media normally?
No. Only during rare search operations, when there is reason to believe tax evasion. Not for regular returns or assessments.
Do they need court permission?
No. Like physical searches, internal approval from senior officers is enough. Reasons must be recorded.
Can they force me to give passwords?
Yes. If you refuse, they can override access, like breaking a lock.
What is virtual digital space?
It means any online place like email, social media, apps, cloud storage, digital wallets where data is kept.
How many searches happen in a year?
Only 100-200 major searches across India, targeting big evasion cases.
Is this against privacy rights?
Some experts say yes, lacks safeguards. Government says necessary and proportional for tax enforcement.
What if they find personal non-money data?
Law does not clearly say. Critics want rules to delete unrelated data.
Can I challenge a digital search?
Yes, in courts if you think it was wrong or misused.
Does this apply to everyone?
No. Only if selected for search based on information of undisclosed income.