As India prepares for the rollout of the Income Tax Act, 2025 from April 1, 2026, discussions around Section 247 have resurfaced, with taxpayers and industry stakeholders questioning whether the provision expands the government’s reach into personal digital spaces.
Addressing these concerns, the government has reiterated that the new section does not grant any additional or "unlimited" powers to tax authorities and merely clarifies provisions that already existed under the earlier law.
Clarification Issued in Parliament
The issue was raised in the Lok Sabha during the ongoing Union Budget Session, where members sought clarity on whether the provision allows unrestricted access to digital platforms or enables AI-driven monitoring.
Responding to the query, Minister of State for Finance Pankaj Chaudhary dismissed the claims, stating that Section 247 is broadly aligned with the search and seizure framework under the Income-tax Act, 1961.
He emphasised that the power to override access codes to computer systems already existed earlier and has now been explicitly recognised in view of technological advancements and increased use of digital records.
Scope Limited to Search Operations
Section 247 outlines the powers of authorised officers during search and seizure proceedings where there is reason to believe that undisclosed income, assets or documents exist.
The provision allows access to digital information such as electronic records, emails, device data and cloud storage. However, officials clarified that these powers are strictly limited to authorised search operations and cannot be exercised during routine assessments or regular compliance checks.
Government Denies AI Surveillance Claims
A major point of concern has been speculation that the new law allows tax authorities to use Artificial Intelligence tools to scan personal digital accounts.
The government has categorically stated that the provision contains no reference to AI or automated monitoring, calling such claims incorrect and misleading.
Continuity With Earlier Law
Officials maintain that Section 247 is essentially a modernised version of the earlier search provisions, ensuring the law keeps pace with evolving technology without expanding enforcement powers.
The Finance Ministry has stressed that the intent is to remove ambiguity around digital evidence rather than introduce new authority.
Stakeholder Concerns Persist
Despite the clarification, debates around privacy safeguards continue. The Institute of Chartered Accountants of India had earlier noted that broader wording could raise privacy concerns and suggested limiting access to official communication channels where possible.
These discussions highlight the balance policymakers are attempting to strike between enforcement efficiency and individual privacy rights.
Key Takeaways for Taxpayers
- Section 247 governs search and seizure procedures
- It reflects existing provisions under the 1961 law
- Digital access is permitted only with proper authorisation
- Routine tax filings and scrutiny remain unaffected
- No AI-based monitoring powers are included
The Road Ahead
With the new tax regime set to become operational in April 2026, experts expect additional rules and procedural guidance to further clarify implementation aspects and address stakeholder concerns.
For now, the government maintains that Section 247 should be viewed as a clarification of existing law rather than an expansion of powers, even as the conversation around privacy and digital rights continues.
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