The upcoming Income Tax Bill 2025 grants tax authorities significant new powers to combat tax evasion. According to Clause 247 of the bill, if an individual possesses undisclosed income, assets, or accounts stored in a locker, vault, or safe and refuses to provide access, tax officials will have the legal right to break it open. They will also be permitted to enter any premises to conduct searches.
From April 1, 2026, the Income Tax Department will have expanded authority to investigate individuals suspected of tax evasion. If a person fails to report their income, properties, or valuable assets correctly, officials will have the power to conduct searches at their residence and confiscate assets if necessary. These measures are being introduced under the New Income Tax Bill 2025 to strengthen the enforcement of tax laws.
Seizure of Properties in Tax Evasion Cases
The department will also have the legal authority to seize properties in cases of suspected tax evasion. Under the existing Income Tax Act of 1961, Section 132, tax officers already have the power to conduct searches and seize bank accounts and assets. The new bill further reinforces these measures, ensuring stricter action against tax fraud.
However, honest taxpayers will not face any difficulties due to these new provisions. According to tax expert S.R. Patnaik from Cyril Amarchand Mangaldas, the new law should be used only in exceptional cases and not as a general rule. In today’s digital era, personal privacy must be respected, and the law should be enforced based only on solid evidence.
Officials Can Access Digital and Physical Assets
Under Clause 247, if an individual’s undisclosed assets or income records are stored in a safe, locker, or box and the key is unavailable, tax officials will have the right to break it open. The department will also have permission to search any property or location for tax-related investigations.
If a lock requires a security code, tax officials can use technical means to unlock and access the contents. Furthermore, tax officers will have the right to examine computer systems, digital storage, and virtual spaces to obtain crucial tax-related information.
Clarification Needed on Virtual Digital Space Regulations
Experts believe that the new tax bill needs clearer regulations on Virtual Digital Space (VDS). The expansion of VDS provisions raises concerns about legal validity and enforcement mechanisms. While the government justifies these regulations as a way to curb digital tax evasion and undisclosed digital assets, the vague definition of VDS may lead to surveillance over personal and financial digital data.
Without strong security measures, the bill could create a conflict between financial investigations and personal privacy rights. This could result in legal challenges and may reduce trust in India’s digital financial system.
Officials Authorized to Access Data
Under the new Income Tax Bill, the following officials will be granted access to personal financial data for tax investigations:
- Joint Director or Additional Director
- Joint Commissioner or Additional Commissioner
- Assistant Director or Deputy Director
- Assistant Commissioner or Deputy Commissioner
- Income Tax Officer or Tax Recovery Officer
The new tax bill aims to strengthen financial compliance and reduce tax evasion, but experts warn that proper safeguards must be in place to prevent misuse of power. As the bill moves forward, clearer definitions and stronger privacy protection measures will be essential to ensure a balanced approach between enforcement and individual rights.
Frequently Asked Questions (FAQs)
Q: When will the new Income Tax Bill come into effect?
Ans: The bill is expected to be enforced from April 1, 2026, giving tax authorities more powers to investigate tax evasion.
Q: Will honest taxpayers be affected by these new rules?
Ans: No, these new provisions are aimed at tackling tax evasion. Honest taxpayers who comply with the law will not face any issues.
Q: Can tax officials search and seize digital assets?
Ans: Yes, under Clause 247, officials have the authority to access computer systems, digital storage, and virtual spaces to find tax-related information.
Q: What happens if a person refuses to cooperate during a tax investigation?
Ans: If an individual fails to provide access to lockers, safes, or digital records, tax authorities have the legal right to break open the storage and retrieve necessary documents.
Q: Who has the authority to conduct searches and seizures?
Ans: High-ranking tax officials such as Joint Directors, Additional Directors, Commissioners, and Income Tax Officers will have the authority to conduct searches and access financial data.
Q: Does the bill ensure privacy protection for taxpayers?
Ans: While the bill aims to curb tax fraud, experts have raised concerns about privacy issues. Strong security measures are needed to balance financial investigations and individual rights.
Q: Can the government seize a person’s entire property in case of tax evasion?
Ans: The government has the right to seize assets if substantial evidence of tax fraud is found. However, seizure will only apply to undeclared income or properties linked to tax evasion.