The new Income Tax Bill, 2025, is designed to make tax laws simpler for everyone. It uses clear formulas and tables, which should make it easier for people to understand the rules without always needing help from tax professionals.
Privacy and Access to Data
The tax department now has large amounts of financial data and, under the new bill, can also access digital information, like social media accounts, during certain investigations. However, officials clarified that this power is not new — it already existed under the previous law (Income Tax Act, 1961, Section 132).
These powers will only be used during search and survey operations in serious cases. Everyday taxpayers, even those under review, won’t be affected unless there’s strong evidence of major tax evasion. The updated clause (Clause 247) allows access to locked devices, but it’s only for official use in specific situations.
With more financial activities happening online — like digital banking and cryptocurrency — the department says these tools help catch serious tax cheats. They also stressed that strong privacy controls are in place. Data is only accessed when necessary, and only by people who need it. Officers don’t know the identity of the taxpayers they’re reviewing, which ensures fair handling.
No Extra Powers, Just Better Tools
Officials explained that the new bill doesn’t give the department any additional powers. It follows a “Trust First, Scrutinise Later” approach. Most taxpayers are honest, and only high-risk cases with solid proof of fraud will be investigated deeply. The department aims to build trust while making it harder for large-scale evaders to escape.
No Mass Surveillance
The department made it clear that it will not monitor everyone’s online or social media activity. Investigations are only done in serious cases, and even then, there are checks and reviews in place. Taxpayers can also challenge any unfair decision through an appeals process.
Faster Refunds Thanks to Technology
The use of technology has improved tax refunds. Automation and real-time verification have reduced the average refund time from 93 days in 2013-14 to just 17 days in 2024-25. This has improved taxpayer satisfaction.
Future Use of AI and Technology
While current use of AI in the department is limited, new systems like Insight 2.0 will help track down fake companies, black money, and suspicious transactions in the future. AI tools will help find unusual patterns, predict fraud, and process large amounts of unstructured information more efficiently.
