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The Lok Sabha on Monday (August 11, 2025) passed the revised Income Tax Bill, 2025 without any debate.
The Bill seeks to simplify, rationalise, and shorten the existing Income Tax Act, 1961. It also broadens the powers of income tax officials, allowing them to forcibly break into personal emails and social media accounts of assessees during search operations. The revised Bill was passed amid vociferous protests by the Opposition against the special intensive revision of electoral rolls in Bihar.
Union Finance Minister Nirmala Sitharaman had introduced the previous version of the Bill in the Lok Sabha in February, following which it was sent to a Select Committee chaired by Baijayant Panda for a review. The Select Committee submitted its recommendations on July 21. Following this, the government on Friday (August 8, 2025) withdrew the Bill to incorporate the suggestions made by the committee.
Ms. Sitharaman introduced the updated version — the Income Tax (No. 2) Bill, 2025 — in the Lower House on Monday (August 11, 2025). The Bill has around 2.59 lakh words compared with the 5.12 lakh words in the Income Tax Act, 1961. The number of chapters has been brought down to 23 from 47 and the number of Sections to 536 from 819.
In order to provide greater clarity, the new Bill has increased the number of tables to 57 from 18 and the number of formulae to 46 from six.
Apart from these changes, the new Bill has also tweaked the powers of income tax officials during search and seizure operations.
The new Bill requires any person “who is found to be in possession or control of” any books of account or other documents in electronic form to provide the authorised officer assistance in accessing these, “including access code, by whatever name called”.
Further, it allows the authorised officer to “override the access code to any computer system” if the access code is not made available.
The Select Committee defended these provisions in its report, saying that various “incriminating evidences and material are found/seized from electronic records including WhatsApp communications, emails, etc” and that passwords for these are often not shared with officials.
However, a few members of the committee submitted dissent notes calling for changes to these provisions. Congress MP Amar Singh argued that the wording of the relevant section “gives very wide-ranging power to the government to force tax payees to hand over all types of personal digital data including passwords, chats, etc.” and asked for a reduction in these powers.
“This provision is arbitrary and [gives] excess powers to the authorities and there is every chance of misuse of this provisions and ultimately infringing the Right to Privacy of an individual guaranteed in the Constitution and reiterated by the Supreme Court in Puttaswamy case,” Revolutionary Socialist Party leader N.K. Premachandran said in his dissent note.
He added that the provisions in the original Income Tax Act, 1961 were sufficient and should be retained.
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