The federal government has informed tax officers to invoke the brand new provisions of the Firms Act to get their fingers on info which are sometimes saved overseas, in keeping with an inside set of directions shared with Earnings tax (I-T) officers on Tuesday, sources informed ET.
Underneath the brand new guidelines corporations should hold a backup of the books of account and different related paperwork on servers positioned in India every day even in instances the place such backups are maintained in one other jurisdiction. When an abroad service supplier is employed to carry the information, new laws require corporations to share with the Registrar of Firms (ROC) the identify and deal with of the one who has management over the paperwork.
In a revised digital proof investigation handbook, the apex physique Central Board of Direct Taxes (CBDT) has alerted tax officers to “take note the amendments made within the regulation on the situation of servers and revised necessities to be disclosed mandatorily to the ROC.”
The brand new manual-the earlier one was issued a decade ago-assumes significance with most giant taxpayers storing a bulk of their monetary and private info in digital kinds and digital gadgets.
New I-T Regulation Come Useful
“Lately, there have been a number of adjustments like introduction of the Bharatiya Sakshya Adhiniyam, 2023 changing the Indian Proof Act, 1872, company regulation amendments requiring upkeep of books of accounts in an digital kind. There has additionally been elevated administrative deal with new asset lessons like Digital Digital Property (crypto currencies, belongings held in digital wallets, and so on.) and fixed adjustments within the subject of expertise and synthetic intelligence being extensively utilized by varied regulation enforcement businesses. Powers of tax authorities conducting search proceedings have additionally been enhanced beneath the new tax legal guidelines (Earnings Tax Act, 2025), which can take impact from 1 April 2026,” stated Ashish Mehta, associate on the regulation agency Khaitan & Co.Certainly, beneath Part 132(4) of the present I-T regulation, a tax officer conducting a search can look at on oath any one that is discovered to be in possession or management of any books of account, paperwork, cash, bullion, jewelry or some other priceless article. Nevertheless, part 247(6) of the brand new I-T regulation (that may come into power subsequent 12 months) considerably widens utility of the statute. It additionally empowers tax officers to formally query any one that is current within the premises or can entry any digital information or laptop system.
Monitoring digital proof
Thus, Part 247 of the brand new tax regulation authorises officers to enter and search anywhere the place an digital machine or laptop system holding related info is suspected to be stored.
Based on Ashish Karundia, founding father of the CA agency Ashish Karundia & Co, “Increasing the ambit of the search beneath the brand new tax is a shift that every one stakeholders should make a psychological be aware of. What stands out within the handbook is the acknowledgement of recent communication instruments, together with conversations with AI platforms, as potential sources of proof. It is a forward-looking strategy by CBDT to sharpen investigative capabilities and information how such proof must be noticed, seized, and analysed, all whereas sustaining authorized integrity and information privateness requirements.”
The search technique now emphasises tracing digital trails, inspecting server logs, consumer entry patterns, emails, and information storage programs to detect tax evasion which may be hid inside enterprise IT infrastructure, he stated.
If the forensic staff is unable to salvage information from an offshore server, tax officers have been directed to take steps to protect the information until it may be retrieved. One of many channels that may be tapped is the ‘G-8 24/7 Community of INTERPOL‘ for information preservation, says the handbook.
Typically individuals whose house and places of work are searched deny the possession of pen drives discovered within the premises and allege that such gadgets are planted by tax officers to nab them. In such conditions, the handbook instructs tax officers to make use of USB logs taken from forensic backup of the assessee’s laptop computer to show that the pen drive has been used properly earlier than the search was initiated.
as a Dependable and Trusted Information Supply
