IT Act 2025

Amendments to the IT Rules, 2026: Effectuating the Tiger Global Case 

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On 31st March 2026, the Central Board of Direct Taxes (‘CBDT’) notified amendment to two sub-rules of Rule 128, The Income Tax Rules, 2026 (‘IT Rules, 2026’). Reactions to the amendments are neatly divided: while a few believe that the amendments are to effectuate the Supreme Court’s decision in The Authority for Advance Rulings (Income Tax) and Others v Tiger Global International II Holdings (‘Tiger Global case’), others have observed that the amendments are to dilute its impact. In this article, I suggest that the CBDT has amended the IT Rules, 2026 to codify the ratio of Tiger Global case. Though before I elaborate on my claim, three preliminary things: 

Firstly, in this article I’ve not elaborated either facts or the Supreme Court’s decision in the Tiger Global case; for context, you can read my preliminary comments on the case. 

Secondly, before reading this article you may want to look at the side-by-side comparison of the pre-amendment and post-amendment rules.

Thirdly, Rule 10U, IT Rules, 1962 is pari materia with Rule 128, IT Rules, 2026. Former was the subject of discussion in the Tiger Global case and latter, as its successor, is the subject of recent amendments discussed in this article.      

In this article, my first claim is that amendments to the IT Rules, 2026 have been introduced to eliminate any confusion about the applicability of General Anti-Avoidance Rules (‘GAAR’) to investments made before 1st April 2017. A confusion that was partly caused by use of the phrase ‘without prejudice’ in Rule 10U(2), Income Tax Rules, 1962 (‘IT Rules, 1962’). I underline this claim by analyzing relevant portions of the Delhi High Court’s judgment that was overruled by the Supreme Court in the Tiger Global case. My second claim is that amendment to the IT Rules, 2026 brings greater clarity about the Income Tax Department’s (IT Department) stance on the interaction of GAAR with Double Taxation Avoidance Agreement (‘DTAA’) benefits. Specifically, the India-Mauritius DTAA. However, the Supreme Court’s interpretation of cut-off date in the Tiger Global case has not been diluted by the amendment. Finally, a crucial piece of the puzzle is still missing. We still do not know judicial meaning of the term ‘arrangement’ – and by extension impermissible avoidance arrangement – despite the Supreme Court relying on it to decide the Tiger Global case. Thus, despite the amendments to the IT Rules, 2026, the crucial test of applying Rule 128 to facts will determine the tax fate of future investments. And the tax fate may, in most cases, hinge on how courts interpret the term arrangement.    

Grandfathering of Investments  

Grandfathering in the IT Rules, 2026 is rooted in grandfathering in the India-Mauritius DTAA. Originally, an import of Article 13(4) of the India-Mauritius DTAA was that capital gains earned by a resident of Mauritius from securities listed in Indian stock exchanges were taxable only in Mauritius, the state of residence. While the vice-versa was also true, it mainly benefited companies incorporated in Mauritius aiming to access the Indian stock market. In 2016, Protocol to the India-Mauritius DTAA amended Article 13 – inserted Article 13(3A) – to provide taxation rights to the source country. Implying that India now had taxation rights on capital gains earned by companies incorporated in Mauritius. But Article 13(3A) was to be only applicable to gains from alienation of shares acquired on or after 1st April 2017. Article 13(3A) thus grandfathered investments and taxability of securities acquired before 1st April 2017 which were to be governed by the original provision. 

Rule 10U(1) of the IT Rules, 1962 intended to achieve the same effect as Article 13(3A) of the India-Mauritius DTAA, but in relation to GAAR. Specifically, Rule 10U(1)(d) provided that GAAR shall not apply to any income that arises, accrues, is received or deemed to accrue, arise or received by any person from transfer of investments made before 1stApril 2017 by such person. However, Rule 10U(2) stated that: 

Without prejudice to the provisions of clause (d) of sub-rule (1), the provisions of Chapter X-A shall apply to any arrangement, irrespective of the date on which it has been entered into, in respect of the tax benefit obtained from the arrangement on or after the 1st day of April, 2017. (emphasis added)

A combined reading of Rule 10U(1) and 10U(2) suggested that while grandfathering benefit was available for investments, arrangements could not claim the same benefit. But this was not the only possible interpretation. Use of the phrase ‘without prejudice’ created room to suggest that Rule 10(2) did not completely override Rule 10U(1)(d). And it is on this specific point that the Delhi High Court made a few pertinent observations.    

‘Without Prejudice’ in the IT Rules, 1962 

The IT Department argued before the Delhi High Court that ‘without prejudice’ clause implies that Rule 10U(2) overrides Rule 10U(1)(d). Even though an arrangement may have been entered before 1st April 2017, any benefit obtained from it after 1st April 2017 will be subject to GAAR. On the other hand, the counsel for Tiger Global resisted the IT Department’s interpretive approach, and argued that use of ‘without prejudice’ cannot permit interpreting Rule 10(2) inconsistently with Rule 10U(1)(d).  

The Delhi High Court refused to accept the IT Department’s argument and observed that: 

Apart from the above, if the argument of Mr. Srivastava were to be accepted, it would amount to sub-rule (2) immediately taking away what stood saved in the immediately preceding provision, namely, clause (d) of sub-rule (1). If the submission of Mr. Srivastava were to be upheld, it would lead to a wholly irreconcilable conflict between the two aforenoted provisions. However, the arguments addressed along the aforesaid lines are clearly erroneous since it fails to consider the meaning liable to be ascribed to the expression ―without prejudice to…..which appears in sub-rule (2). (para 231) (emphasis added)

The Delhi High Court thus clearly stated that accepting the IT Department’s argument would amount to Rule 10U(2) taking away the benefit conferred by Rule 10U(1)(d). Additionally, the High Court elaborated on the meaning of ‘without prejudice’ by relying on ITO v Gwalior Rayon Silk Manufacturing (Weaving) Co Ltd. In short, the meaning of ‘without prejudice’ in the context of Rule 10U can be distilled as: (i) Rule 10U(2) cannot be inconsistent to or prejudicial to Rule 10U(1)(d); (ii) while Rule 10U(2) was an independent provision it was subject to Rule 10U(1)(d). 

Apart from the meaning of ‘without prejudice’, the Delhi High Court also invoked the grandfathering benefit introduced via Article 13(3A) of the India-Mauritius DTAA. The High Court observed that the India-Mauritius DTAA had clearly provided safe passage to transactions completed before 1st April 2017. And accepting the IT Department’s argument that Rule 10U(2) overrides the grandfathering benefit provided in Rule 10U(1)(d) would mean:

…a delegatee of the Legislature while framing subordinate legislation being competent to override a treaty provision. A subordinate legislation would thus stand elevated to a status over and above a treaty entered into by two nations in exercise of their sovereign power itself. (para 230)

The Delhi High Court held that permitting secondary legislation to override international treaty obligations is unacceptable. Cumulatively, Article 13(3A) of the India-Mauritius DTAA and meaning of ‘without prejudice’ was used by the Delhi High Court to prevent the IT Department from invoking GAAR against Tiger Global. The High Court’s observations on Rule 10U are an important reference point to understand interpretation of secondary legislation, meaning of the phrase ‘without prejudice’ and how DTAA obligations can and do influence domestic laws. 

Amendments Align with Ratio of the Tiger Global Case

The Supreme Court in the Tiger Global case overruled the Delhi High Court. The IT Department’s stance before the Supreme Court can be summarized as: Rule 10U(1)(a) grants grandfathering benefit only to investments made before 1stApril 2017 and not to arrangements entered before 1st April 2017. Thus, Rule 10U(2) can be applied to deny benefits to arrangements entered before the said date. The Supreme Court agreed with the IT Department and held that: 

Therefore, the prescription of the cut-off date of investment under Rule 10U(1)(d) stands diluted by Rule 10U(2), if any tax benefit is obtained based on such arrangement. The duration of the arrangement is irrelevant. (para 46)

It stands to reason that the Supreme Court interpreted ‘without prejudice’ to have same meaning as ‘notwithstanding’. And, by doing so, clarified that the relationship of Rule 10U(2) with Rule 10U(1)(d) is that the former occupied a higher pedestal. It is to reinforce this legal position that Rule 128(2), IT Rules, 2026 has been amended to state that:

The provisions of Chapter XI shall apply to any arrangement, irrespective of the date on which it has been entered into, in respect of the tax benefit obtained from the arrangement on or after the 1st April, 2017, except for that income which accrues or arises to, or deemed to accrue or arise to, or is received or deemed to be received by, any person from transfer of such investments which were made before the 1st April, 2017 by such person. (emphasis added) 

There are two inter-related reasons why I suggest that the above amendment is to effectuate ratio of the Tiger Global case. Firstly, the removal of ‘without prejudice’ clause eliminates any confusion as to whether Rule 128(2) overrides Rule 128(1)(d). A confusion that was evident in the Delhi High Court’s judgment which was not in favor of the IT Department. Secondly, Rule 128(2) now uses the word ‘irrespective’. This aligns with the new legislative policy under the IT Act, 2025 to use ‘irrespective’ instead of ‘notwithstanding’. If we tentatively understand that meaning of irrespective is equivalent to notwithstanding, then Rule 128(2) overrides Rule 128(1)(d). And it is the primacy of Rule 128(2) that the IT Department successfully argued before the Supreme Court in the Tiger Global case. 

Thus, I suggest that the IT Rules, 2026 now codify the Tiger Global ratio and not dilute it. Grandfathering benefit is available only to investments, not to arrangements. The date on which the arrangement was entered – before or after 1st April 2017 – is immaterial as GAAR can be invoked against all arrangements. 

No Change in Cut-Off Date

The Supreme Court in the Tiger Global case suggested that gains arising after cut-off date of 1st April 2017 cannot claim the grandfathering benefit. Supreme Court’s observations on Rule 10U(1)(d) were that the cut-off date was for capital gains and not the investments. See, for example, the Supreme Court’s following observation: 

… in the case at hand, though it prima facie appears as if the assessees acquired the capital gains before the cut-off date, i.e., 01.04.2017, it is to be noted that the proposal for transfer of investments commenced only on 09.05.2018. (para 47)

The Supreme Court is clearly concerned that capital gains were not earned by Tiger Global before the 1st April 2017 instead of determining if the investment was made before that date. The Supreme Court also elaborated that the underlying transaction was only completed after the 1st April 2017 to underline that capital gains were only earned after cut-off date. However, grandfathering – under the India-Mauritius DTAA and the IT Rules, 1962 – protected investments made before 1st April 2017 and did not require that income should be earned before the said date. Since Rule 10U(1)(d) and Rule 128(1)(d) contain substantially the same language the Tiger Global ratio is certainly not diluted by amendment to the IT Rules, 2026. Rule 128(1)(d) of the IT Rules, 2026 states that GAAR shall not apply to: 

any income accruing or arising to, or deemed to accrue or arise to, or received or deemed to be received by, any person from transfer of such investments which were made before the 1st April, 2017 by such person.”; (emphasis added) 

Rule 128(1)(d) clearly states that investments were made by a person before 1st April 2017 but the income transfer of such investments was realised after the said date, GAAR shall be inapplicable. Rule 10U(1)(d), reproduced below also stated the same: 

any income accruing or arising to, or deemed to accrue arise to, or received or deemed to be received by, any person from transfer of investments made before the first day of April, 2017 by such person.(emphasis added)

The addition of ‘which were’ in the amended rule is hardly a substantive amendment. In the absence of any substantial difference between Rule 10U(1)(d) and Rule 128(1)(d), the Supreme Court’s observations on cut-off date remain the law until their basis is removed by a statutory amendment or subsequent decision(s).  

Meaning of ‘Arrangement’ May Continue to be Contentious 

The above changes though still leave us searching for one crucial answer. The meaning of arrangement. GAAR is applicable only if the arrangement is an impermissible avoidance arrangement. The Supreme Court referred to the statutory definition of an impermissible avoidance arrangement – in Section 96, IT Act, 1961/Section 179, IT Act, 2025 – which states that it is an arrangement whose main purpose is to obtain a tax benefit and is carried out by means or manner which is not ordinarily employed for bona fide purposes. In the Tiger Global case the Supreme Court stated that transaction in question was an impermissible avoidance arrangement because: the transaction entered by Tiger Global was exempt from tax under the Mauritius tax law and it was also seeking exemption under the Indian income tax law. Thereby presenting a strong case for the IT Department to deny the benefit under the India-Mauritius DTAA as such an arrangement is impermissible. 

The Supreme Court made no precise observation as to which aspect of the transaction or corporate structure/arrangement adopted by Tiger Global amounts to an impermissible avoidance arrangement. The Supreme Court’s above observations suggest that to claim tax benefit under a DTAA, the taxpayer must pay tax in at least one of the contracting states. And since the case involved an indirect transfer, the Supreme Court’s observations can be applied to similar such transfers in the future. But, overall, specificity as to what constitutes an impermissible avoidance arrangement is missing in the Tiger Global case. Largely, we have the statutory definition of an impermissible avoidance arrangement to rely on for future cases, but the exact scope may emerge through future decisions and as new fact situations require judicial attention. 

Overall, though amendments to the IT Rules, 2026 have ensured that any confusion that could emerge from interpretation of the ‘without prejudice’ clause is removed. And the IT Department is intent on effectuating ratio of the Tiger Global case in so far as application of GAAR in relation to grandfathering benefit is concerned. In short, arrangements entered before 1st April 2017 will be subject to GAAR, only investments can claim the grandfathering benefit. But distinguishing one from the other will require strenuous efforts and contentious interpretations.      

PS: Amendments to the IT Rules, 2026 were uploaded via a notification on the IT Department’s website without any accompanying explanation. Taxpayers were left to their own devices to decode rationale and implication of the amendment. Perhaps the IT Department could have made some effort in communicating its intent.   

Income Tax Act, 2025: A ‘Reform’ Comes to Life 

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The Income Tax Act, 2025 (IT Act, 2025) – after almost a decade of attempts to redraft income tax law – comes into force on 1 April 2026 and replaces the Income Tax Act, 1961 (IT Act, 1961). It’s a unique legislative achievement for various reasons. Two noteworthy reasons are: (a) there was no widespread or pressing demand for enacting a new income tax law; (b) the IT Act, 2025 does not effectuate any major change in tax policy. No other comparable ‘legislative replacement’ comes to mind where a new law was implemented without intending to change the previous policy. Instead, the IT Act, 2025 is an attempt ‘simplify’ the income tax law, remove redundant provisions and overall change the sequence and arrangement of various provisions. A rewriting of the income tax law, if you may.      

The attempt at simplification required the Income Tax Department (‘IT Department’) to devote a significant time – 75,000 person hours – but some of the re-drafted provisions have raised concerns. Until now, the most notable concern has been about the scope of search and seizure powers and their impact on digital privacy of taxpayers. A pre-mature Public Interest Litigation challenging constitutionality of Section 247, IT Act, 2025 – which contains search and seizure powers – was filed before the Supreme Court. But the Supreme Court did not entertain the petitioner’s plea and allowed the petition to be withdrawn. 

In this article, I attempt to provide a descriptive account of three aspects of the IT Act, 2025: origin of the reform, the lack of legislative scrutiny, and a brief comment on the expanded scope of search and seizure powers.    

Forgotten (and Opaque) Roots 

In November 2017, the Union of India constituted a Task Force to draft a new income tax law. The Task Force was mandated to draft an income tax law in consonance with the economic needs of India and that aligned with international best practices. The Task Force was not constituted because of any major or specific concerns about the IT Act, 1961. In fact, major concerns were about the IT Department’s propensity to amend the IT Act, 1961: frequently and retrospectively. And this propensity was fuelled by an intent to overcome loss in courts. The Press Information Bureau’s communication dated 22 November 2017 only states that there was a concern that the IT Act, 1961 was more than five decades old. And there is need to draft a new income tax law. A generic and weak concern that triggered the mammoth exercise of drafting a new income tax law. 

In July 2019, the Finance Minister Ms Nirmala Sitharaman informed the Rajya Sabha that there was no proposal under consideration regarding the Direct Taxes Code, but a task force had been constituted to draft a new income tax law. This statement, in my view, was an attempt to distinguish the NDA government’s attempt to rewrite the income tax law with the UPA government’s previous attempt of overhauling the IT Act, 1961 via a Direct Taxes Code. Nonetheless, she also informed that the remit of Task Force had been expanded and it will now provide suggestions on faceless assessments, reducing litigation, making compliance burdens less onerous, and examine sharing of information with indirect tax departments.  In August 2019, there were sporadic news reports that the Task Force had submitted its report. But the report and recommendations of the Task Force were never made public. The report, its recommendations, and its draft of income tax law – if any – remain a blackhole in India’s income tax law reform history. A Task Force on income tax law, funded by taxpayers, but whose final recommendations and work remain beyond the taxpayers’ access. Irony sometimes visits Indian tax reform, only to mock us taxpayers.      

Any reports or information on the Task Force’s recommendations died a natural death after 2019. There is no public record of any progress or discussion on income tax reform. And, then, after 5 years of silence, in her Budget Speech of 2024, Finance Minister Ms Nirmala Sitharaman announced a ‘comprehensive review’ of the IT Act, 1961. She informed the Parliament that the purpose was to make the statute more lucid, easy to read, and reduce disputes and litigation. She added that the entire exercise was to take six months. But there was no reference to the recommendations or work of the Task Force constituted in November 2017 or whether the ‘comprehensive review’ was an extension of their work. Or whether Union of India had decided to reject all recommendations of the Task Force. Since the Task Force was mandated to draft a new income tax law, presumably its draft was unacceptable to the Union of India necessitating the need to initiate a complete review five years after the Task Force had submitted its report. 

Nonetheless, first draft of the IT Bill, 2025 was introduced in the Lok Sabha in the Budget Session of 2025. It is anyone’s guess as to whether the draft is based on, similar to, or a complete variation from the one drafted by the Task Force in 2019. Anyhow, the introduction of first draft unleashed the vocabulary of ‘simplification’ of income tax law. The Union of India – under the NDA government – wanted that the IT Bill, 2025 be examined on the touchstone of leanness and simplification. And not whether the IT Bill, 2025 was necessary in the first place. Thus, one question that slipped through the cracks: what made the IT Act, 1961 cumbersome? One vital reason: tendency of the IT Department to amend the law each time they lost a major case. The most dramatic and popular amendment is the retrospective amendment made in 2012 in aftermath of the Vodafone case. But, in my view, amending the IT Act, 1961 as an annual ritual – during the Budget- contributed to making it cumbersome. In short, it is not solely the age of IT Act, 1961 that made it cumbersome and complicated. Tax administration was also responsible to making the law unwieldly.   Unless the IT Department’s habit of effectuating annual amendments – to overcome a loss in courts – is brought to a halt, the IT Act, 2025 will suffer the same fate. 

Quick Legislative Passage and Amendments 

The Select Committee on the IT Bill, 2025 submitted its recommendations in July 2025 and, one month later, the IT Act, 2025 was passed by both Houses of the Parliament in the Monsoon Session of 2025. I’ve remarked elsewhere – of course, in jest – that the hurry with which the IT Bill, 2025 was passed should not lead courts to ascribe any ‘legislative wisdom’ to drafting of its provisions. The legislative hurry ensured that there was no meaningful legislative scrutiny of various provisions by either the Lok Sabha or the Rajya Sabha. Thus, it is not a stretch to say that the IT Act, 2025 is a law conceived and drafted by the executive and the Parliament merely rubber stamped it. While the Parliament rubber stamping various laws has been an increasing trend for various laws, in the context of income tax law such a practice brings into focus the idea of no taxation without representation. Elected representatives – especially in the Lok Sabha – should ideally scrutinise the quantum and methods with which the Union of India wishes to extract income tax from the taxpayers. But income tax policies are hardly the subject of any legislative debates and scrutiny. Executive fiat is determining our income tax burdens.   

Which brings me to, what I suggest, is a related issue. Frequent amendments to income tax laws. The IT Act, 2025 possesses the rare distinction of being amended before its implementation. The IT Act, 2025 comes into force on 1 April 2026 and in February-March of 2026, the Budget of 2026 proposed to amend some of its provisions. One reason for amendments to a law that was yet to be implemented was partially tied to the swiftness of its legislative passage. If the IT Bill, 2025 was never examined by either the Lok Sabha or the Rajya Sabha, there were bound to be some errors and oversights. While it is true that the IT Department spent a considerable time in drafting the law, the Select Committee prepared a gargantuan report detailing its observations and views of various stakeholders; there is no replacing a meaningful legislative debate.   

Of course, I don’t mean to say that if a meaningful and substantive legislative debate takes place, it cannot stop errors from creeping in the statute. Neither does it mean that the law will not be frequently amended. However, legislative debates – at the very least – can serve as useful insights into legislative intent. And this can be particularly useful because the IT Department frequently reasons that a particular provision is being amended because courts misunderstood legislative intent. In the absence of a legislative debate, what was the legislative intent remains only in the executive’s knowledge. Taxpayers only find out about the legislative intent if and when the executive chooses to reveal it. And while, in courts, the IT Department does frequently cite legislative intent to support its interpretation of the provision it is not supported by any legislative debates. The closest source we get are some statements by the Finance Minister in the Parliament while introducing or clarifying the amendments. Or if the amendments were made as part of the Finance Act, then the accompanying Memorandum might contain some brief explanations. But that is not true for all amendments as several provisions are amended via the Finance Act but no corresponding explanation for the amendment is found in the Memorandum. 

A quick-paced legislative passage, no meaningful legislative debate or scrutiny of the relevant provisions means that the income tax law becomes the site of back and forth between the IT Dept and courts. That is what frequently happened with the IT Act, 1961. And unless there is a serious change in the tax administration’s approach and the Parliament becomes more robust, we are likely to witness a similar scenario with the IT Act, 2025.  

Powers of Search and Seizure 

This brings me to third aspect of the IT Bill, 2025 that has caught attention in some quarters. To begin with, there is need to clarify that the IT Dept possessed search and seizure powers under the IT Act, 1961 too. Section 132 of the IT Act, 1961 empowered income tax officers to enter any building or place, seize any books of account or documents, place marks of identification on books of account or make copies. The corresponding provision in the IT Act, 2025 – Section 247- makes a crucial addition and extends the powers to electronic records. 

Section 247 states that where the competent authority has reason to believe that any person to whom summons have been issued has omitted or failed to produce any documents any books of account or documents are may be required by summons or notice; it may authorise relevant officers to enter and search a building, vessel or aircraft where it has reason to suspect that such books of account or documents are kept. Section 247(1)(a)(II) extends this power to ‘any information in an electronic form or a computer system’ which will be relevant to proceedings under the IT Act, 1961 or IT Act, 2025. Section 247(b)(ii) takes this power even further and states if a person is found in possession of an electronic record, information in electronic form or a computer system; the officer may require such person to:

such reasonable technical and other assistance (including access code, by whatever name called) as may be necessary to enable the authorised officer to inspect such books of account or other documents or such information;  

Thus, the officer can demand the person whose electronic record it is trying to access to provide technical assistance for accessing the record. 247(b)(iii) further states that if the access code to a computer system is not available, the officer can override it. Thus, the extension of powers to access computer systems and electronic records is comes with the power to obligate the person to provide access, and on refusal override the access codes. The extension of search and seizure powers to electronic records and computer systems can be justified by pointing towards ubiquitous nature of digitalisation. If the income tax officers had similar powers in respect of physical books of accounts and documents, their extension to digital sphere is an example of the law keeping abreast of contemporary practices. Equally, the threshold of ‘reason to believe’ needs to be satisfied, and the powers of search and seizure contain in-built safeguards.  

I’ve expressed my preliminary views on the interface of privacy and tax previously. But, two quick points on widening of search and seizure powers under Section 247 of the IT Act, 2025. First, extension of search and seizure powers to computer systems has a high probability of bringing personal devices within their scope. If not, personal devices per se, the IT Dept can gain access to a taxpayer’s personal data on an official computer system. In fact, the IT Department – even before implementation of the IT Act, 2025 – has confiscated mobile phones and laptops raising concerns of privacy and potential leak of personal data on these devices. The IT Department’s assurance that the device and data will be used in accordance with the law is effectively lack of any legal protection against invasion of privacy. Second, it is worth examining if the threshold of ‘reason to believe’ is sufficient protection vis-à-vis computer systems and electronic records. The courts have consistently upheld that reason to believe is a subjective standard and requires a speaking order detailing reasons. But, have refrained from scrutinising the material or information that led to the concerned officer arriving at the belief. But, with the Supreme Court endorsing right to privacy and introduction of personal data laws, it is worth examining if reason to believe provides adequate protection in the emerging landscape on privacy. My tentative view is: reason to believe is insufficient.    

There needs to be a safeguard, that if the computer system especially a mobile phone/laptop is used for personal and professional purposes, the income tax officer cannot seize or access it without any prior restrictions. An additional filter, on a priori basis, is necessary to provide a meaningful safeguard. Else, an officers’ reason to believe is sufficient for them to gain access to a taxpayers’ social media accounts, personal communication, financial records, and other personal data. The kind of information that is likely to be on mobile phone or laptop if it is also used for personal purposes. Reason to believe may be sufficient for income tax officers to gain access to business premises of a taxpayer, and conduct search for physical books of account; but extending it computer systems is fraught with the risk of violation of privacy.                

The Future Beckons   

Indian income tax  – and its reform – has a long history. The latest addition to it – IT Act, 2025 – has its roots in the Task Force constituted in 2017. But, since 2019, the Union of India has avoided any reference to recommendations and report of the Task Force. The second wind for replacing the IT Act, 1961 caught momentum in 2024 and will reach its conclusion on 1 April 2026. We can only speculate how much of the efforts to simplify the law are attributable to the Task Force. Nonetheless, what we do know is that the IT Act, 2025 is leaner and shorter with fewer provisions. I’m tempted to analogise it with being lean, but not healthy. But, it is difficult to say with certainty if the change in language and use of alternate vocabulary will create less litigation, free up capital caught in pending court cases, or otherwise contemporise India’s income tax law. What we do know is that there are two major trends that are almost contemporaneous to simplification of the income tax law: first, a movement to new tax regime as the default regime; second, a push, even if marred with controversies, towards faceless assessment. A third crucial aspect remains uncertain: India’s stance on digital taxation. While the equalisation levy has been made redundant, what follows its removal is not entirely certain.  

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