Proposed Amendments in Income-Tax Bill, 2025
The Finance Minister's proposal aims to empower tax authorities to access an individual's "virtual digital space" during search and seizure operations.
Current Legal Framework
- Existing Provisions: Under Section 132 of the Income-Tax Act, 1961, search and seizure are limited to physical spaces like homes and offices.
- Objective: To find undisclosed income or assets based on suspicion.
Concerns with the New Proposal
- Privacy and Overreach: The proposal extends to digital spaces, potentially infringing on individual privacy.
- Vagueness: The definition of ‘virtual digital space’ includes emails, cloud drives, social media, and more, with open-ended criteria.
- Professional Confidentiality: Risks to journalists and professionals whose work involves sensitive information.
Judicial and Global Standards
- Supreme Court Guidelines: Interim guidelines on digital device seizure highlight the need for clear protocols.
- International Practices:
- Canada: Charter of Rights and Freedoms safeguards against unreasonable search/seizure.
- USA: Taxpayer Bill of Rights and Riley vs California decision emphasize legal compliance and warrants.
Proportionality and Privacy
The Supreme Court of India mandates a proportionality test for privacy infringements, requiring state actions to be legitimate, necessary, and minimally intrusive.
Recommendations
- Principles: Uphold proportionality, legality, and transparency in digital enforcement.
- Safeguards: Narrow the definition of 'virtual digital space', require judicial warrants, and ensure transparency in enforcement actions.