THE INCOME TAX ACT, 2025, hastily slammed through both houses of Parliament in August without any parliamentary debate or discussion, contains an outrageous and repressive provision that grants sweeping powers to the Assessing Officer to invade a taxpayer’s digital informational privacy.
While the power to conduct search and seizure is not new - being delineated earlier in Section 132 of the Income Tax Act, 1961 (‘1961 Act’) — one would have expected that the exercise of revisiting a sixty-year-old statute would have been used as an opportunity to align the power with the Supreme Court’s jurisprudence on privacy in the digital age. Instead, the new law doubles down on authoritarian practices, rendering the law even more draconian.
Section 247 empowers the tax authority to enter and search any place where “electronic media” or a “computer system” is suspected to contain relevant information. Section 261(e) defines the term “computer system” expansively to include “virtual digital space,” thus covering personal and professional communication platforms, social media accounts, cloud storage, and other online repositories. In effect, the law extends traditional physical search powers into the digital sphere, radically enlarging the scope of state intrusion into the informational domains of individuals. It is an expansion that raises serious constitutional concerns.
Why the new law must be tested against Puttaswamy’s proportionality standard
In 1973, the constitutionality of Section 132 of the 1961 Act was unsuccessfully challenged before a five-judge Constitution Bench of the Supreme Court in Pooran Mal v. Director of Inspection. Pooran Mal, in turn, relied on M.P. Sharma v. Satish Chandra (1954), which had held that, unlike the Fourth Amendment in the United States, the Indian Constitution imposed no express limitation on search and seizure powers, including on grounds of privacy. However, that jurisprudential foundation no longer holds.
In K.S. Puttaswamy v. Union of India (2017), a nine-judge Constitution Bench of the Supreme Court emphatically recognised privacy as a fundamental right integral to Articles 14, 15, 19, and 21 of the Constitution. By doing so, Puttaswamy overruled M.P. Sharma, and by necessary implication, cast doubt on Pooran Mal.
Consequently, the new law must be tested against the proportionality standard articulated in Puttaswamy:
(i) the measure must pursue a legitimate aim;
(ii) there must be a rational nexus between the measure and its objective;
(iii) no less intrusive alternative should be available; and
(iv) the measure must strike a balance between the importance of the objective and the rights infringed.
While preventing tax evasion may be a legitimate State aim, the inclusion of social media accounts and personal digital communications within the sweep of Section 247 bears no rational nexus to the determination of taxable income. Invading the private digital lives of taxpayers is disproportionately intrusive and fails the Puttaswamy test.
Without preliminary inquiry or judicial oversight, the 2025 Act is constitutionally inform
These sweeping powers are often sought to be justified on the ground that the law contains certain in-built safeguards. It is correct that the law requires the Assessing Officer to record reasons as to why she believes a search and seizure exercise is required. It is also correct that prior sanction must be obtained from, and granted by, a higher official before initiating search and seizure. However, these so-called in-built safeguards are merely an empty ritual in practice. Searches are often authorised even when the taxpayer has fully cooperated with the Assessing Officer during the assessment proceedings. The vague statutory language permits initiation of search proceedings on tenuous grounds, such as an unsubstantiated suspicion that a taxpayer “is likely” to withhold cooperation.
The absence of a requirement for preliminary inquiry, or judicial oversight, compounds the constitutional infirmity. Sanction is often granted mechanically, without any meaningful application of mind by the sanctioning authority. In practice, “reasons” are often manufactured during or after the search, to justify roving and fishing expeditions. This structure effectively insulates executive action from contemporaneous scrutiny, while permitting authorities to justify intrusive searches by ex post facto reliance on material discovered in the course of the raid. The façade of safeguards is further eroded by Section 249, which stipulates that the “reason to believe” recorded by the authority shall not be disclosed to the taxpayer, or even the Tribunal. Although judicial review remains formally available, it occurs only after the intrusion has already taken place, rendering the remedy illusory. A taxpayer is incapacitated from mounting any meaningful legal challenge, since she remains in the dark about the very grounds on which her privacy has been invaded.
The dangers of these provisions are not merely theoretical. In a separate article, I had argued how the ruling government has weaponised tax law against dissent. The BBC offices in India were raided weeks after the release of a documentary critical of the Prime Minister. The philanthropic status of The Reporters’ Collective was denied soon after its investigative reports on electoral bonds. NewsClick was targeted under anti-terror law on vague allegations of “anti-India” propaganda.
These episodes illustrate how search and seizure powers can be deployed as tools of political retaliation to intimidate, silence, and financially cripple critical journalism and civil society. By lending statutory legitimacy to what I would call “retaliatory raids,” Section 247 risks chilling constitutionally protected speech and dissent, particularly in today’s digital age where political critique largely takes place online.
The new provisions pose a direct threat to both individual liberty and democratic accountability, and any democracy committed to constitutionalism cannot countenance tax law as a tool for mass digital surveillance. It is imperative that our courts subject these provisions to the most exacting judicial scrutiny and reaffirm that privacy and free expression in the digital domain are not privileges to be enjoyed at the mercy of a powerful executive.