Amid debates over new Section 247, the government clarified in the Lok Sabha that fears of unlimited digital surveillance and AI-based intrusion into taxpayers’ private data were misplaced. Officials reiterated that no extraordinary powers were granted, assuring privacy safeguards.
NEW DELHI: The introduction of Section 247 in the new Income-tax Act, set to take effect from April 1, 2026, has ignited a fresh wave of debate. Taxpayers and industry representatives have raised ongoing concerns that this provision grants “unlimited powers” to tax officials, enabling them to access taxpayers’ personal digital spaces.
However, the government and the Income Tax Department have repeatedly countered these claims. Recently, during the first part of the Union Budget Session, clarification was provided in the Lok Sabha, stating that such fears are unfounded and asserting that no new sweeping powers have been introduced under the revised law.
In a notable unstarred question posed in Parliament, Members of Parliament inquired,
“whether it is a fact that the introduction of new Section 247 in the Income Tax Act to be effective from 1st April 2026 has created a lot of confusion among taxpayers as it gives unlimited power to income tax officials to access digital space using Artificial Intelligence (AI)…”
Minister of State for Finance Pankaj Chaudhary responded by dismissing these assertions. He emphasized that Section 247 of the Income-tax Act, 2025, which pertains to search and seizure, aligns with Section 132 of the Income-tax Act, 1961.
He further explained,
“Even though power to override access code to any computer system was already available under section 132 of the Income-tax Act, 1961, specific enablement has been made for the same in the Act considering the evolution of digital space and rapid advances in technology.”
Notably, the Minister also remarked,
“There is no mention of Artificial Intelligence in the provision of section 247 or any related provision.”
The government concluded that Section 247 does not confer any new powers to income-tax authorities.
Section 247 of IT Act
Section 247 pertains to the powers of search and seizure. It permits authorized personnel including Income Tax Officers, Assistant Directors, and Assistant Commissioners to carry out search operations if they possess “reason to believe” that a person holds undisclosed income, assets, records, or pertinent information.
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This provision also extends to digital records, enabling officials to scrutinize electronic records, emails, data stored on devices, cloud information, and other digital communications. Crucially, these powers are strictly applicable only during formally sanctioned search operations and do not extend to ordinary tax assessments, return processing, or regular scrutiny.
According to the government, Section 247 in the upcoming Income-tax Act, 2025, is essentially a reiteration of Section 132 of the Income-tax Act, 1961. The power to override access codes and examine digital systems was already embedded in the previous law. The Finance Ministry clarified that the new legislation simply makes this point explicit, taking into account advancements in technology and digital spaces. It does not bestow any novel or unrestricted authority.
Concerns about Section 247 are not new. Previously, social media posts suggested that tax officials would gain extensive authority to access personal emails and social media accounts beginning April 1, 2026. The government clarified then that Section 247 does not afford general or routine access to taxpayers’ digital platforms.
Furthermore, in its pre-Budget memorandum, the Institute of Chartered Accountants of India (ICAI) expressed worries that the provision might infringe upon individuals’ fundamental right to privacy, proposing that access be limited to official email accounts rather than encompassing all electronic communications. These concerns have resurfaced in discussions within Parliament.
One of the primary allegations was that the law empowers officials to utilize Artificial Intelligence for monitoring or accessing digital spaces. The government has explicitly stated that there is no reference to Artificial Intelligence in Section 247 or any related provisions. Consequently, the claim that tax officers will employ AI tools to routinely scan or access personal digital accounts lacks legal grounds under this provision.
While privacy concerns remain a topic of discussion in policy circles, the government’s official stance is clear: Section 247 does not confer unlimited or new powers to income tax authorities. With the implementation of the new Income-tax Act, 2025, set for April 1, 2026, further clarifications and detailed regulations are anticipated to enhance implementation and address stakeholder apprehensions.