PHOTO DIVISION (PIB)
Finance Minister Defends Access to Encrypted Messages Under New Tax Bill
Finance Minister Nirmala Sitharaman has defended a controversial provision in the proposed Income Tax Bill, 2025, which allows tax authorities access to encrypted digital communications such as WhatsApp chats and emails. She argued that this move is essential in tracking down unaccounted wealth and addressing the increasingly digital nature of financial crimes.
Encrypted Chats as Investigative Tools
The Finance Minister cited several cases where access to encrypted chats during raids helped uncover large stashes of black money. She emphasized that such communication platforms have evolved into tools used by individuals to conceal income and carry out tax evasion without detection. In the absence of legal provisions to examine these digital footprints, tax authorities have found themselves constrained while dealing with complex financial investigations.
The current Income Tax Act of 1961, she noted, is largely focused on physical records and does not sufficiently account for the digital realities of today’s financial ecosystem. The new legislation aims to modernize investigative tools by formally bringing digital data, including encrypted communications, under scrutiny during probes.
Use of Technology in Tracing Assets
The Finance Minister also pointed to broader use of digital forensic tools by the Income Tax Department. Investigators have reportedly tracked unaccounted wealth through mobile phone data, including chat histories, search histories, and even Google Maps location logs. In some instances, investigators used Instagram photos to link individuals to expensive assets like luxury cars registered under benami names.
This high-tech approach, she claimed, is helping authorities uncover elaborate tax evasion schemes that rely heavily on digital platforms and anonymity.
Privacy Concerns Remain
Despite these justifications, the provision has raised concerns among privacy advocates and legal experts who fear it may lead to government overreach and surveillance. Details remain unclear on whether authorities would decrypt encrypted messages directly or extract information from seized devices. Questions also persist about safeguards and oversight to prevent misuse of these powers.
As the bill moves through the legislative process, a debate continues around the balance between enforcing tax compliance and preserving citizens’ digital privacy.
