India’s Taxman To Get Sweeping Digital Surveillance Authority

India’s Income Tax Department could soon be getting a s fleeting number of digital surveillance powers, that would let them monitor and, if needed, access individuals’ social media accounts and emails all in the name of curbing crypto fraud.

This move, if approved, is slated to take effect from April 1, 2026. It is part of the Income Tax Bill 2025, which aims to improve the detection of tax evasion and undisclosed assets in the country’s rapidly growing digital economy.

Tax Officials to Access Crypto Holdings

Under Clause 247 of the new tax bill, tax officials will have the authority to override passwords and access codes to digital platforms and computer systems if tax evasion is suspected. This includes access to cryptocurrency wallets, exchanges, and other virtual digital spaces where assets may be stored or transacted.

Related: ByBit Registers in India, Eyes Return After Paying $1M+ Fine

The government argues that the move is necessary to modernize tax investigations in line with the increasing digitalization of financial transactions. The authorities plan to utilize digital forensics to trace undisclosed income and hidden wealth, particularly in crypto assets, which have long been a challenge for tax enforcement.

Privacy Advocates Voice Concerns Over Broad Surveillance

However, the bill has sparked concerns among privacy advocates, who argue that such broad surveillance powers could lead to potential misuse and violations of citizens’ digital rights.

The bill is currently under review by a select committee, which will consult stakeholders before finalizing the legislation.

India Tightens Crypto Tax Grip

Adding to the expanded monitoring powers, India is tightening its grip on cryptocurrency taxation. According to Indian Finance Minister Nirmala Sitharaman’s Union Budget 2025 announcement, cryptocurrencies will be included under Section 158B of the Income Tax Act, which governs undisclosed income.

Key changes include the introduction of a new tax of up to 70% on previously undisclosed crypto gains. Also, crypto assets will fall under the Virtual Digital Asset (VDA) category, as per Section 2(47A) of the Income Tax Act.

Related: This Indian Company Just Went All-In on Bitcoin: Here’s Why

Block assessments will apply to cryptocurrency transactions if not properly reported, bringing them under the same tax treatment as traditional assets like money, jewelry, and bullion. Further, a new reporting obligation will require entities under Section 285BAA of the Act to present details of crypto transactions.

The crypto tax amendment will be retrospectively applicable from February 1, 2025, meaning any unreported crypto gains before that date will still be subject to the new tax laws.