If tax evasion is suspected, the Income Tax Department will be legally empowered to examine a person’s internet presence, including their bank accounts, social media accounts, emails, and online trading platforms, starting April 1, 2026. In keeping with the increasing digitisation of financial transactions, this clause in the proposed Income Tax Bill seeks to modernise tax investigations.
If officials suspect unreported income or tax fraud, they are empowered to inspect and take tangible assets, including cash, gold, jewellery, and financial papers, under the existing Income Tax Act, 1961. When required, these searches also involve opening lockers and safes.
However, this authority will now encompass digital platforms due to the impending revision. If tax officials suspect that tax-related material is being hidden, they will have access to computer systems, email accounts, and social media activity.
How Will This Impact Taxpayers?
According to the new law, tax officials will track down assets and income that have not been declared by using digital forensics. Officials may launch an investigation if a taxpayer’s reported income conflicts with their social media lifestyle or online financial activity. By preventing financial fraud and undeclared wealth creation, the action aims to improve tax compliance.
This current strategy creates privacy and data security issues even if it has the potential to greatly reduce tax evasion. According to experts, people should make sure their tax returns are precise and completely reveal their interests and income. Those with significant holdings or investments are advised to seek expert tax guidance in order to prevent any government investigation.
It is unclear how successful this new digital enforcement approach will be, but one thing is for sure: India’s tax compliance is about to enter a new era of digital monitoring.
