Tax Surveillance: A dangerous precedent for privacy and liberty

The proposed Income Tax Bill, 2025, gives unrestricted access to tax authorities, raising serious concerns about privacy violations, civil liberties, and the risk of an authoritarian surveillance state.

Through an unacceptable incursion into fundamental rights to digital privacy, the Indian government introduced provisions in the Income-tax Bill, 2025, granting tax authorities sweeping powers to access individuals’ digital platforms—including emails, social media, and cloud storage—without requiring prior judicial approval. These changes, purportedly aimed at curbing tax evasion, risk eroding fundamental rights and violating privacy of law abiding citizens, and set a dangerous precedent for unchecked bureaucratic power. At a time when India’s standing in freedom indices is already questioned, sacrificing citizen’s rights for State revenue optimization is a grossly unnecessary regression.

India’s Supreme Court unequivocally recognized privacy as a fundamental right in Justice K.S. Puttaswamy (Retd.) & Anr. vs Union of India (2017), ruling that citizens cannot be subjected to indiscriminate state surveillance without legal safeguards.

Opening provided in the Bill

In the Income Tax Bill 2025 following measures are proposed:

1) Section 247 states: “Where the competent authority … has reason to believe” and “… the approving authority … has reason to suspect”

2) Section 248 also states:  “Where the approving authority … has reason to believe”

3) Section 249 states: The reason to believe or reason to suspect, as referred to in section 247 or 248, recorded by the income-tax authority shall not be disclosed to any person or authority or the Appellate Tribunal.

The proposed amendment to the Income Tax Act effectively disregards the landmark SC judgment by giving tax officials unfiltered access to private digital communications. The total power structure enabling this intrusion on citizens’ rights is internal to the tax department and their reasons to intrude beyond any scrutiny, to the extent that the officials don’t even have to disclose the reason in any judicial forum. Such a move is not only unconstitutional but also a dangerous overreach that threatens personal liberty, business confidence, and democratic governance.

The rapid digitalization of personal records has created an unprecedented level of data aggregation. Platforms such as DigiLocker, WhatsApp, Facebook, Google searches, and financial records can be combined to create a 360-degree profile of an individual. Never in human history has such extensive personal data been so easily accessible, and every single person is fully exposed. This places an immense responsibility on the government to protect privacy, in line with the Supreme Court’s recognition of privacy as a fundamental right.

Past mistakes don’t justify repetition

Apologists of this new unrestrained power of the IT department defend the move saying such powers already existed for tax raids and physical documents—this is true, it was already a dangerous overreach, and the abuse is well documented.

The government, instead of fixing this, is giving them the same unchecked powers to invade any citizen’s digital data and open them to roving enquiries and fishing expeditions. The proposed Income Tax Bill, 2025, gives unrestricted access to tax authorities, raising serious concerns about privacy violations, civil liberties, and the risk of an authoritarian surveillance state.

The overreach of the proposed tax law

1. Expanding the State’s Digital Dragnet

The new amendment to the Income Tax Act allows tax officers to:

* Override access codes and passwords to enter digital platforms, including emails, WhatsApp messages, and cloud storage.

* Gain unrestricted access to virtual digital spaces, defined vaguely enough to encompass social media, financial records, and other private communications.

* Operate without judicial oversight, making it easier for tax authorities to conduct broad, speculative searches without concrete evidence of wrongdoing.

This provision turns tax enforcement into a surveillance tool, disregarding due process and undermining individual freedoms. If allowed, it will give officials the power to construct a 360-degree profile of any citizen, mining personal data for any perceived irregularity—a level of intrusion unprecedented in modern India.

2. The Supreme Court’s Warning on Privacy and State Overreach

The Justice K.S. Puttaswamy ruling (2017) emphasized that:

* Privacy is intrinsic to personal liberty under Article 21 of the Indian Constitution.

* Any restriction on privacy must be proportionate, necessary, and legally justified.

* The state cannot violate privacy without strong legal safeguards, including judicial oversight and due process.

By contrast, the new tax law grants disproportionate power to tax officials without any accountability, violating the principles established in this judgment.

Allowing government authorities to access private conversations and digital assets without due process is a direct assault on fundamental rights. Under the proposed system, both the officer seeking the raid and the approving authority are internal, with no independent application of mind or safeguard, with no obligation to disclose reasons to any judicial authority. Further, there is no punishment for abuse of this power, no limitation on this power, and no review of the exercise of this power by independent bodies. Citizens are fully exposed to arbitrary assault on their privacy.

3. The Dark History of Tax Terrorism in India

India’s tax enforcement authorities have a long history of excesses, where aggressive tax raids often turn into tools of harassment rather than genuine investigations. Unprecedented tax terrorism has been observed for a long time:

* Raids conducted without sufficient evidence, often based on anonymous complaints.

* Confiscation of personal and business assets, disrupting businesses and livelihoods.

* Forced confessions and arbitrary tax claims, later overturned in court.

This pattern underscores why unfettered digital access for tax officers is highly dangerous. Without strict safeguards like prior judicial approval, these powers will inevitably be misused, leading to politically motivated probes, business intimidation, and citizen harassment.

4. Judicial Oversight is Critical

If tax authorities claim they need access to digital communications for investigations, they must prove their case in court before being granted such access. Judicial oversight ensures:

* Burden of proof remains on tax authorities, preventing speculative fishing expeditions.

* Searches are backed by credible evidence, rather than personal discretion.

* Protection against abuse, ensuring privacy rights remain intact.

A system where tax officers have unchecked authority turns the state into the judge, jury, and executioner. Even if the intent is to curb tax evasion, the means must respect democratic principles and due process. Data on tax evasion discovered over the years indicates it is not an overarching issue in India. Most taxpayers are honest law-abiding citizens who have suffered under an arbitrary tax system in silence. The significant amounts stuck in disputes indicates a failed tax assessment system. Instead of fixing this first, the government seeks to pour ghee in the fire with these new amendments.

5. The Economic Fallout: Chilling Effect on Businesses and Investments

Beyond the constitutional concerns, this move will have severe economic consequences. If tax officers can intrude into digital communications without due cause, businesses will face:

* Increased uncertainty and fear, discouraging entrepreneurship and investment.

* Data privacy concerns for global companies, reducing India’s attractiveness as a business hub.

* Potential retaliatory actions from international regulators, as many nations have strict digital privacy laws.

India’s success in the digital economy relies on trust in government institutions. Creating a surveillance-driven tax regime without adequate constitutional safeguards will severely damage India’s reputation as a stable and predictable investment destination.

Conclusion: Parliament must act to protect citizens’ rights 

The proposed amendment to the Income Tax Act represents a direct attack on privacy and civil liberties, contradicting the Supreme Court’s landmark ruling on fundamental rights. Granting tax officers unchecked access without safeguards to prevent abuse and protect citizens’ rights to private digital data sets a dangerous precedent, opening the door for broader state surveillance under the guise of tax enforcement.

India’s Parliament must ensure robust safeguards are in place, including:

* Mandatory judicial approval for digital searches by tax authorities.

* Clear limitations on data access, preventing mass surveillance.

* Strict penalties for misuse of digital search powers.

If Parliament fails to intervene, lawmakers themselves could one day fall victim to these excessive powers when political tides shift. In a democracy, state power must always be restrained by legal checks and balances—without them, every citizen is vulnerable to government overreach.

India is experiencing unprecedented tax buoyancy. Personal income tax receipts have surged at a compounded annual rate of 22.8% to Rs 12.57 trillion in 2024-25 from Rs 8.33 trillion in 2022-23. When most citizens are complying and paying taxes, the government must find ways to ease the process instead of allowing tax officials to harass citizens in new ways.

India must choose: A tax enforcement system grounded in constitutional rights and liberty, or an intrusive surveillance state where privacy is an illusion. The right choice is clear.