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The new Income Tax Bill aims to streamline taxation by using simpler language and reducing the number of sections. Replacing the complex 1961 Act is a welcome move.

However, some provisions raise serious concerns about privacy and excessive state authority. One of the most contentious aspects is the requirement for taxpayers to provide tax officials with access codes to their computers during search and seizure operations.

This significantly expands the power of tax authorities, allowing them to scrutinise digital records with minimal resistance. While the intention may be to curb tax evasion, the implications for privacy, data security, and potential misuse cannot be ignored. The government must recognise that citizens typically do not store financial information on personal computers.

India’s regulatory and legal framework for data protection is still evolving. Granting officials access to personal and financial data without strong safeguards risks violating fundamental privacy rights. 

This provision runs contrary to established legal principles that require due process before breaching private data. It could enable fishing expeditions rather than targeted investigations. The balance between tax enforcement and individual rights must be carefully maintained.

Another key change is the replacement of “assessment year” and “previous year” with a single “tax year.” While it may seem minor, this shift aligns India’s tax system with global practices, reducing confusion for businesses and individual taxpayers. For years, the dual terminology created unnecessary complexity, particularly for those unfamiliar with tax jargon.

The Bill also seeks to make the tax code more accessible by cutting down the number of sections and simplifying language. The goal is to create a more transparent system that reduces ambiguity and the scope for misinterpretation.

However, the real challenge lies in implementation. India’s tax system is notorious for procedural delays and inconsistent legal interpretation. The objective is to foster trust in the tax system, but this cannot be achieved if enforcement mechanisms lead to overreach.

Otherwise, simplification may come at the cost of individual freedom—an outcome that a democracy must guard against and one that may not withstand judicial scrutiny.