Finance Minister Nirmala Sitharaman announced that the new Income Tax Bill will be taken up for discussion during the Monsoon Session of Parliament. This bill, introduced on February 13, 2025, is currently being examined by the Select Committee, which has been asked to submit its report by the first day of the next session.

While speaking in the Lok Sabha during the debate on the Finance Bill, 2025, Sitharaman explained that the new bill aims to update the old tax laws, especially focusing on digital records.

New powers for tax officers

One important change in the new income tax bill is adding digital records to tax checks. Right now, the Income Tax Act from 1961 only talks about physical records—like paper documents. Since it doesn’t mention digital data, people often refuse to share passwords or access codes for their phones or computers. This leads to court cases where they argue they shouldn’t have to share their digital information. The new bill closes this gap by officially including digital records in tax assessments, making it harder to avoid sharing data during investigations.

“So, digital becomes an issue...  That gap is getting filled up in the new income tax bill, which is before the select committee,” Sitharaman said.

The new bill gives tax officers more authority. They will be able to override access codes to computers, online trading accounts, cloud servers, and other digital spaces during search and seizure operations—especially if the person under investigation refuses to cooperate.

Sitharaman explained why checking digital records is important. She said that investigators recently found ₹250 crore of hidden money by cracking encrypted messages on mobile phones. Authorities also used Instagram accounts to figure out who really owns expensive cars and properties that were registered under fake names (called Benami properties). Even Google Maps history helped track down places connected to hidden cash and illegal deals. This shows how digital data can reveal financial secrets that would otherwise stay hidden.

The finance minister also spoke about a “nudge” campaign launched by the Income Tax Department. The campaign encouraged people to voluntarily disclose their foreign income and assets.

As part of this campaign, the department sent SMS and emails to 19,501 taxpayers, asking them to review their income tax returns for 2024–25.  This was based on data showing they may have foreign deposits.

The result? 11,162 taxpayers revised their returns, filed forms for foreign assets, and declared₹11,259.29 crore worth of assets, along with₹154.42 crore in foreign income. Additionally, 883 taxpayers corrected their status from resident to non-resident.

Sitharaman shared the overall success of the campaign, saying, “Cumulatively, this simple nudge has resulted in the declaration of foreign assets worth ₹29,208 crore and foreign income up to ₹1,089 crore by 30,161 taxpayers.”

Addressing privacy concerns

The opposition raised concerns that the new bill might invade people’s privacy, especially with provisions allowing tax officers to access WhatsApp chats, Instagram accounts, and Google Maps data.

In response, Sitharaman clarified that these powers already exist in the current law—specifically in cases of search and seizure when authorised officers face non-cooperation. She emphasised that the new bill only makes these rules clearer, especially for digital data.

She explained, “The provision to look into data exists in the current environment too, particularly in cases of search and seizure authorised by competent authorities where access code is not available and the person concerned is not cooperating with the proceedings.”

GST debate: Is it fair?

The minister also addressed claims that GST (Goods and Services Tax) is not progressive (meaning it unfairly burdens poorer people). Sitharaman called these arguments “absolutely unfounded.”

She provided data to back this up, stating:

  • The wealthiest 20% of Indians contribute 41.4% of household GST and 14.2% of total GST.
  • The bottom 50% contributes 28% of household GST and 9.6% of total GST.
  • The poorest 50% face an average effective GST rate of 7.3%, while the old indirect tax system averaged 15%.

“So this argument that it is not progressive is not right at all,” Sitharaman said.

Finance bill passed

After the discussion, the Lok Sabha passed the Finance Bill 2025, including various amendments proposed by the government. Amendments suggested by two opposition members were rejected through a voice vote.

Sitharaman defended the bill, calling it “unprecedented tax relief," and said the 13.14% projected growth in personal income tax collection is “realistic” and backed by data.

She also explained the decision to abolish the 6% equalisation levy on online ads, saying it was necessary due to “uncertainty in international economic conditions.”

On customs tariffs, she said the budget aims to boost domestic production and make Indian products more competitive by cutting duties on raw materials.

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