Lok Sabha passes new Income Tax Bill in just 3 minutes, without debate

In what can politely be described as a brazen display of legislative haste, the Lok Sabha on Monday passed the Income Tax Bill (No. 2) 2025 — a sweeping rewrite of India’s tax laws — in just three minutes, without a shred of debate.

The Bill is intended to replace the 63-year-old Income Tax Act, streamlining processes such as TDS, exemptions, and other compliance-heavy provisions, while introducing measures like penalty-free refunds on delayed filings.

Yet, for a law that will affect every individual taxpayer and corporation in the country, it was pushed through as Opposition MPs continued to disrupt proceedings over allegations of irregularities in the Special Intensive Revision (SIR) of electoral rolls in Bihar — allegations the government seems in no hurry to answer.

Union finance minister Nirmala Sitharaman had withdrawn the original Income Tax Bill, 2025 — introduced in February — on 8 August. The revised version incorporated recommendations from a Parliamentary Select Committee. But instead of allowing scrutiny, questions, or even minimal discussion, the ruling party steamrolled the legislation through a voice vote amid Opposition slogan-shouting.

The Bill now heads to the Rajya Sabha and, once approved there, to the President for assent. Upon Presidential approval, it will become law.

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According to the government, the new legislation drastically reduces the size and complexity of the current Income Tax Act, cutting the number of sections and chapters almost in half, and replacing outdated terms like “assessment year” with “tax year” to make the law easier to understand.

It restores provisions from the 1961 Act, including allowing taxpayers to claim TDS refunds even if they file returns after the statutory deadline, and reintroduces deductions for certain inter-corporate dividends. It also aligns definitions of micro and small enterprises with other allied laws.

“Almost all of the recommendations of the Select Committee have been accepted by the Government. In addition, suggestions have been received from stakeholders about changes that would convey the proposed legal meaning more accurately,” reads the Statement of Objects and Reasons.

Tax consultant Sandeep Jhunjhunwala of Nangia Andersen LLP described the Bill as “balanced, pragmatic, and taxpayer-oriented” in some respects — but the most contentious issue remains virtually untouched.

The privacy problem the government won’t address

The original draft tabled in February contained Clause 247, a chilling expansion of search and seizure powers for tax authorities. It would have allowed officers not only to break into physical spaces — such as safes, lockers, and offices — but also to bypass passwords and gain direct access to “virtual digital spaces” like personal email accounts, social media, and other online platforms if a taxpayer “refused to cooperate”.

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This sparked an outcry from privacy advocates, who warned it would hand sweeping, poorly regulated powers to officials, enabling state intrusion into private correspondence, financial platforms, and personal data under the thinnest veneer of suspicion.

In the revised Bill passed on Monday, the explicit phrase “digital space” has been removed from the clause — but not from the definitions section, where it remains included under “computer systems”. In other words, the capacity for digital surveillance remains embedded, only more quietly.

From 1 April 2026, when the law comes into effect, tax officials will still be empowered to override passwords and access an individual’s online accounts — from banking apps to trading platforms — if they claim to suspect tax evasion.

Context the government glossed over

The 1961 Income Tax Act already grants broad physical search-and-seizure powers, often criticised for being open to abuse and intimidation. The inclusion of unfettered access to citizens’ digital lives — especially in an era where personal, financial, and professional identities are all intertwined online — represents an escalation that civil rights lawyers say is not being sufficiently debated in Parliament or the public domain.

That such sweeping changes to the state’s power to probe, monitor, and access personal data could be passed in three minutes without any floor debate should alarm every taxpayer.

The government calls it simplification. Critics call it a Trojan horse. Either way, starting 2026, your inbox, your bank accounts, and your private messages may be just a password override away from government inspection.

With agency inputs