Finance Minister defended access to encrypted WhatsApp talks under the Income Tax Bill 2025

Finance Minister Nirmala Sitharaman has strongly defended a provision in the Income Tax Bill, 2025, giving tax authorities the power to intercept encrypted emails and messages to prevent tax evasion and financial fraud. While defending the move, she referred to recent examples where decrypted WhatsApp messages led to the seizure of over Rs.90 crore worth of cryptocurrency assets of an illegal syndicate.

Growing Fears of Encrypted Communication in Financial Crimes

Sitharaman stressed that applications for encrypted communication, such as WhatsApp, are increasingly being misused for transactions such as money laundering and tax evasion. She referenced that the existing Income Tax Act of 1961 only protects physical materials like books of accounts and ledgers and not digital documentation. The loophole, according to her, creates hardships in financial inquiries. The bill proposes to bridge this gap by enabling the possibility of taxmen’s access to encrypted digital communication. Sizeable Recoveries Through Encrypted Data Access

The Finance Minister asserts that over Rs.250 crore worth of unaccounted money has already been traced and confiscated by probing into encrypted messages and mobile phone records.

She revealed that queries into WhatsApp messages revealed fraud gangs making fictitious bills for Rs.200 crore and cases where capital gains arising out of the sales of property got distorted through spurious documents, reducing taxable value from Rs.150 crore to Rs.2 crore. Apart from this, WhatsApp professional networks have also been credited with fiscal misconduct. Beyond messaging platforms, Sitharaman stated that tax authorities have utilized Google Maps history to detect cash hideouts and locate unaccounted transactions. Similarly, Instagram accounts have been utilized in identifying benami property-based luxury car ownership. Encryption Debate and WhatsApp’s Response

While the new provision gives enormous powers to the authorities, there have been concerns raised regarding how the encrypted messages were accessed. It has not been determined if WhatsApp’s end-to-end encryption was compromised or if the authorities employed device seizure to access information. The ambitious nature of the bill has also been a point of contention on whether it aligns with the aggressive encryption policy embraced by messaging apps.

Meta-owned WhatsApp, with about three billion users worldwide, has not issued any public comment on the proposed bill. The company claims that end-to-end encryption ensures that only the recipient and the sender can read messages. As per WhatsApp’s policy, no third party, including the platform, can see private messages.

The Indian government and the messaging platform have already been at cross-purposes on encryption-related legislation. In 2021, the Indian government was sued by WhatsApp, resisting the IT Rules, 2021, which required platforms to identify the originators of messages. In April 2024, WhatsApp had told the Delhi High Court that it would evaluate exiting from the Indian market if it were forced to loosen its encryption policies.

As talks are ongoing, privacy, data protection, and state monitoring are still an itch that refuses to be scratched, rendering the Income Tax Bill, 2025, a matter of hot debate among lawyers, cyber rights organizations, and money men.