June 30th 2025 Editorial

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.

 

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