India’s Income Tax Department Surveillance Powers

India’s Income Tax Department could be granted new digital surveillance powers to monitor individuals’ social media accounts and emails to combat crypto fraud.

This legislation, if approved, is set to take effect on April 1, 2026, as part of the Income Tax Bill 2025. The goal is to enhance the detection of tax evasion and undisclosed assets within the growing digital economy.

> BREAKING: 🇮🇳
> India’s Income Tax Department gaining authority to monitor all digital activities including #crypto holdings starting April 2026.
> Tax officials will be empowered to access social media and email accounts, bypassing passwords to uncover hidden assets.
> They are now monitoring your wallets.
>
> — Budhil Vyas (@BudhilVyas) March 6, 2025

Tax Officials to Access Crypto Holdings

Under Clause 247 of the tax bill, officials will have the power to override passwords and access codes for digital platforms if tax evasion is suspected. This includes cryptocurrency wallets and exchanges.

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The government asserts that these measures are necessary to modernize tax investigations aligned with the rise in digital financial transactions. Digital forensics will be utilized to trace undisclosed income and hidden wealth, particularly involving crypto assets, which have posed enforcement challenges.

Privacy Advocates Voice Concerns Over Broad Surveillance

Nevertheless, privacy advocates are raising alarms about potential misuse and violations of citizens’ digital rights stemming from such extensive surveillance powers.

The bill is currently undergoing review by a select committee that will consult stakeholders before it is finalized.

India Tightens Crypto Tax Grip

In addition to the expanded monitoring powers, India is tightening its regulations on cryptocurrency taxation. Finance Minister Nirmala Sitharaman announced in the Union Budget 2025 that cryptocurrencies will be subjected to Section 158B of the Income Tax Act, which governs undisclosed income.

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

Block assessments will apply to unreported cryptocurrency transactions, treating them like traditional assets such as money and jewelry. A new reporting obligation will require entities under Section 285BAA of the Act to furnish details of crypto transactions.

The crypto tax amendment will apply retroactively from February 1, 2025, meaning that any unreported crypto gains before this date will also be subject to the new laws.

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