Tax Department Not Monitoring Social Media Accounts Of Taxpayers, Say I-T Sources

A top I-T department official told the media recently that tax officials are not looking to breach the online privacy of common taxpayers even if they come under scrutiny. He reiterated that the new Income Tax Bill prescribes that tax officials can access a taxpayer's digital space or computer device only during search and survey operations, according to media reports. 

He further clarified that the powers of such a mandatory action already existed in the 1961 Act and were only restated in the Income Tax Bill of 2025. He rejected claims made in some reports and opinion pieces that the tax authorities have been granted additional powers to infringe upon personal data, such as passwords for electronic records, such as email, social media handles, and cloud storage space, of taxpayers. 

The officer told the media that such reports were nothing but threatening. It was not the intention of the tax department to snoop into a taxpayer’s social media accounts or online activities. They could only exercise such powers during a search or survey operation, and that also when the assessee was being searched or surveyed, and he refused to share the passwords for digital storage drives, emails, cloud, or communication platforms such as WhatsApp or Telegram, among others. 

According to Section 247 of the Income Tax Bill, 2025, which is presented before the Parliament, an authorised officer could gain access by “over-riding” the access code of a computer system or ‘virtual digital space.’ With an aim to simplify the cumbersome direct tax law, the government has introduced the new Bill to replace the decades-old I-T Act of 1961. 

An authorised officer has the power to inspect documents of a person and to seize such documents (including electronic records as per Section 2(22AA) of the Income Tax Act, 1961) if need be, if he possesses books, accounts, or other documents in electronic form, according to the existing law of Section 132. 

According to the official tax crimes and the methods of tax evasion have now reached a new level of sophistication with the advent of smart internet-based tools and technology. 

According to a second official, it was important to gain access to digital devices and spaces during coercive actions like search and survey to find evidence, and such raids were limited when you look at the data. 

In a financial year, the tax department conducts 100-150 “full-blown” searches and surveys. And such enforcement action is typically not aimed at the common taxpaying individual or entity. Also, only about one per cent are selected for scrutiny, out of about 8.79 crore income-tax returns (ITRs) filed annually. 

And also, the provisions related to ‘virtual digital space’ are not even applicable to these cases under scrutiny. It is only applicable during the process of a search or survey, and not even before this action is mounted. 

The first official further said that the tax department does not snoop or make a back door entry against any individual or entity through their social media accounts. 

According to tax officials, it was not only important to gather evidence from digital accounts to prove tax evasion before a court of law, but it was also for computing the exact amount of tax evaded. 

In some cases, it has been observed, during search and seizure operations, that the taxpayer in charge of books, documents, records, etc., does not co-operate with the proceedings or provide necessary facilities to access the evidence. 

Also, in this digital world, often information is stored in servers and storage facilities overseas, which are not accessible from India. The access code is not shared by the person involved. In such cases, the whole process of search and seizure becomes redundant and this could result in the tax evader going scot-free, according to officials.