Govt justifies decrypting WhatsApp chats under Income Tax Bill 2025

FM Nirmala Sitharaman emphasized that digital communication tools are increasingly misused for financial crimes, and the new bill aims to modernize tax laws by allowing authorities to investigate encrypted platforms, addressing gaps in the 1961 Income Tax Act

Union Finance Minister Nirmala Sitharaman has strongly justified a contentious provision in the proposed Income Tax Bill, 2025, which grants tax authorities the power to access encrypted messages and emails. The move aims to tackle tax evasion and financial fraud, as encrypted platforms increasingly serve as tools for illicit financial activities. Speaking in New Delhi, Sitharaman cited a recent case where decrypted WhatsApp messages led to the seizure of over Rs 90 crore in cryptocurrency linked to an illegal syndicate.

Sitharaman highlighted that digital communication tools are being misused for money laundering and fraudulent financial transactions. She explained that the existing Income Tax Act of 1961 focuses on physical records such as ledgers and account books, failing to address digital financial records. The new bill seeks to bridge this gap, empowering tax authorities to investigate financial misconduct hidden within encrypted platforms.

WhatsApp, Google data uncovered fraud

According to the Finance Minister, authorities have already traced and seized Rs 250 crore in unaccounted funds through the analysis of encrypted messages and mobile data. She detailed cases where fraudulent invoicing schemes on WhatsApp generated fake bills worth Rs 200 crore and where capital gains on land sales were manipulated to reduce taxable amounts from Rs 150 crore to Rs 2 crore. She further noted that even Google Maps history has been instrumental in tracking hidden cash locations and unaccounted transactions, while Instagram profiles have been used to identify assets linked to benami properties.

However, Sitharaman did not specify how encrypted messages were accessed, sparking concerns over whether WhatsApp’s encryption was bypassed or if authorities extracted data from seized devices. The bill’s implications on digital privacy remain a subject of debate, with experts questioning whether it aligns with existing encryption policies used by major messaging platforms.

Privacy vs. Regulation debate grows

Meta-owned WhatsApp, which boasts nearly three billion users worldwide, has yet to respond to the proposed legislation. The platform has long maintained that its end-to-end encryption ensures only the sender and recipient can access messages. Encryption-related disputes between WhatsApp and the Indian government date back years, including a legal battle in 2021 against regulations requiring platforms to trace the origin of forwarded messages. In April 2024, WhatsApp warned that it might consider exiting the Indian market if forced to compromise on its encryption policies. The unfolding debate highlights the growing tension between digital privacy and regulatory oversight in India’s evolving legal landscape.

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