Will the new Income Tax Bill give govt access to your encrypted Whatsapp chats?

Finance Bill 2025: The government has proposed strengthening the legal provisions to track digital assets under the new Income Tax Bill 2025, as the previous Income Tax Act, 1961, did not provide adequate legal backing for investigating digital assets. Finance Minister Nirmala Sitharaman said while discussing the Finance Bill'25 that because the previous Income Tax Act did not provide legal backing for checking digital assets, it has prompted the government to introduce specific measures in the proposed legislation.

“Income Tax Law did not give legal backing to check digital assets, so have included it. Added checking of digital elements in the Income Tax Act, Law should give legal backing,” said FM Sitharaman on the new Income Tax Bill.

Also Read: FM Sitharaman’s ‘nudge’ to come clean on foreign assets adds over ₹30,000 crore to exchequer

Finance Bill 2025: FM gives legal backing to govt accessing digital assets

Under the new framework of the Finance Bill 2025, tax officials can access encrypted communications, cloud storage, and digital asset exchanges if they believe a person has concealed taxable income or cryptocurrency holdings.

FM Sitharaman highlighted that digital forensics played a crucial role in unearthing unaccounted money. "Encrypted messages on mobile phones led to unearthing ₹250 crore unaccounted money. Evidence of crypto assets has been detected in WhatsApp messages. WhatsApp communication helped unearth ₹200 crore unaccounted money," said FM Sitharaman on the new bill.

Also Read: We have pre-paid large chunk of high-cost govt debt, to help state borrowings: FM

She also noted that Google Maps history was used to determine the locations frequently visited to hide cash, and Instagram accounts were analysed to establish Benami property ownership. As part of the Finance Bill, the step aligns tax enforcement with technological advancements, ensuring that virtual digital assets such as cryptocurrencies do not escape scrutiny.

The new tax bill allows officials to access communication platforms like emails, WhatsApp, and Telegram, as well as enterprise software and storage servers businesses use to conceal financial transactions. "Gathering evidence from digital accounts is essential not only to prove tax evasion before a court of law but also to compute the exact amount of tax evaded,'' said the FM.

Also Read: FM Nirmala Sitharaman's eighth budget in eight points

Income Tax Bill 2025

The Lok Sabha passed the Finance Bill 2025 on March 25, along with 35 government amendments, including one abolishing a six per cent digital tax on online advertisements. With the passage of the Finance Bill 2025, the Lok Sabha completed its part of the Budgetary approval process.

The Upper House, Rajya Sabha, will now consider the Bill. After the Rajya Sabha approves the Bill, the Budget process for 2025-26 will be complete. "This Finance Bill, we have attempted to do several things, which as per as the aspiration and the expectation of the people of India and also the goal that the Prime Minister has given us towards the Viksit Bharat by 2047," said FM Sitharaman. Sitharaman said the bill aims to provide tax certainty.