Income Tax Department Does Not Track Online Spending or Digital Activity: PIB Clarifies

Recent claims circulating on social media have suggested that the Income Tax Department monitors online shopping, digital payments, emails, social media activity, and app usage of Indian citizens. These claims have been officially denied by the Government of India through a clarification issued by the Press Information Bureau (PIB).

The PIB fact check stated that there is no system for routine or continuous monitoring of an individual’s digital or online activity by the Income Tax Department. The clarification was issued in response to viral content alleging widespread digital surveillance for tax purposes.

Government Clarification on Digital Tracking Claims

According to PIB, the Income Tax Department does not access personal digital spaces such as emails, social media accounts, cloud storage, trading platforms, or private applications as part of regular tax administration. The claims suggesting otherwise were categorised as misleading.

The clarification emphasised that tax authorities do not engage in behavioural profiling or monitoring of citizens’ online activities, including e-commerce usage, UPI transactions, or app-based spending.

What Financial Information Is Reported to the Tax Department

Statement of Financial Transactions Framework

While personal digital activity is not tracked, certain financial transactions are reported to the Income Tax Department under existing compliance provisions. Section 285BA of the Income Tax Act, 1961 requires specified entities—such as banks, financial institutions, registrars, and intermediaries—to furnish details of select high-value transactions through the Statement of Financial Transactions (SFT) framework.

This reporting mechanism is transaction-based and is designed to assist tax authorities in identifying mismatches between reported income and financial activity. It does not provide item-level purchase data, digital behaviour insights, or information on how individuals use online platforms.

Reporting Is Not Surveillance

The SFT framework has been in place for several years and operates as a statutory reporting obligation for institutions, not as a monitoring tool for individual taxpayers. The information shared is limited to financial values and identifiers relevant for tax compliance.

Access to Digital Records Under the Income Tax Act, 2025

Search and Survey Provisions Explained

With the introduction of the Income Tax Act, 2025—effective from the financial year 2025–26—questions have arisen regarding access to digital data. The new legislation consolidates and modernises existing provisions, including those related to search and survey operations.

Under these provisions, authorised tax officers may access or examine digital records only when a legally sanctioned search or survey is initiated based on evidence of serious tax evasion. Such access is investigative in nature and subject to procedural safeguards.

Income Tax Tracking Online Spending : No Power for Routine Digital Access

The authority to seize documents during search operations has existed since the Income Tax Act, 1961. The extension to digital records reflects modern record-keeping practices and does not create new powers for routine scrutiny, mass data collection, or continuous digital monitoring.

Use of Technology by Tax Authorities

References to the use of technology and analytics by tax authorities have also contributed to confusion. In practice, these tools are primarily used to analyse tax filings, reported financial transactions, and interactions with official income-tax portals. They do not involve monitoring personal internet usage, social media activity, or private communications.

Conclusion

The clarification issued by the Press Information Bureau confirms that routine digital surveillance of taxpayers is neither authorised under Indian tax law nor practised by the Income Tax Department. Financial reporting under the SFT framework and access to digital records during authorised investigations serve specific compliance and enforcement purposes and do not amount to monitoring of personal digital activity.

As misinformation continues to circulate online, SS Auditor advises taxpayers and businesses to rely on official government notifications, statutory provisions, and professional guidance when evaluating their tax compliance obligations.