1. Context: I-T Bill 2025 and Digital Space Access

• Finance Minister proposed that Income Tax authorities be given powers to access an individual’s “virtual digital space” for tax investigations.
  
  
• This includes emails, cloud drives, social media, digital apps, etc.
  
  
• Justification: As financial activity shifts online, tax enforcement must follow.
  
  
• Concern: This significantly increases the state’s surveillance capacity and risks privacy violations.
  
  

2. Existing Powers Under I-T Act, 1961

• Currently, Section 132 allows search and seizure of physical property like homes, lockers, etc., based on suspicion of undisclosed income.
  
  
• These are governed by judicial safeguards and limited in scope.
  
  

3. Problems With the New Definition

• The Bill introduces a vague and expansive term — “virtual digital space.”
  
  
• It includes emails, personal cloud, WhatsApp, photos, videos, etc. — creating disproportionate access.
  
  
• Opens the door for privacy intrusion, affecting unrelated individuals like friends and family whose data is intertwined.
  
  

4. Lack of Procedural Safeguards

• Bill lacks key privacy safeguards:
  
  
  • No judicial warrant required.
    
    
  • No distinction between financial and non-financial private data.
    
    
  • No guidance on necessity, relevance, or proportionality.
    
    
• Violates principles of data minimization and user consent.
  
  
• Unlike U.S. or EU laws, India’s draft law omits due process and privacy thresholds.
  
  

5. Contradiction with Indian Supreme Court Rulings

• In Justice K.S. Puttaswamy (2017), SC ruled privacy is a fundamental right, and any intrusion must pass a four-fold test:
  
  
  1. Legality
     
     
  2. Legitimate aim
     
     
  3. Necessity
     
     
  4. Proportionality
     
     
• The proposed I-T Bill bypasses proportionality, giving blanket powers without checks.
  
  

6. Global Standards and Lessons

• In the S., the Taxpayer Bill of Rights ensures:
  
  
  • Lawful enforcement.
    
    
  • Protection of confidential data.
    
    
  • Judicial oversight.
    
    
• Riley v. California (U.S. SC): Warrants required before searching digital devices due to their sensitive nature.
  
  

7. Way Forward Suggested

• Redefine “virtual digital space” with clarity and limits.
  
  
• Introduce:
  
  
  • Judicial authorization.
    
    
  • Minimum necessary access.
    
    
  • Transparency mechanisms.
    
    
• Parliamentary Standing Committee should review the provision.
  
  
• Ensure digital privacy is not eroded under guise of governance.
  
  

📘 UPSC GS2/GS3-Style Questions

🔹 10-Marker (150 words)

1. What are the concerns raised by the proposed access to an individual’s digital space under the Income-Tax Bill, 2025?
   
   
2. Discuss the principle of proportionality in relation to digital surveillance in India.