UPSC Prelims Practice Questions — Rethinking tax searches for the digital age

Q1. The Income-tax Act, 2025, which extends search and seizure powers to virtual digital space, was enacted as Act number ___ of 2025.

  • A. 12
  • B. 22
  • C. 30
  • D. 41

Q2. Which is the principal provision of the Income-tax Act, 2025 that explicitly authorises tax officers to access 'virtual digital space' during search and seizure operations?

  • A. Section 132
  • B. Section 158B
  • C. Section 247
  • D. Section 285BAA

Q3. Which authority is the nodal body responsible for administering search and seizure under the Income-tax Act, 2025?

  • A. Central Board of Direct Taxes (CBDT) under the Department of Revenue, Ministry of Finance
  • B. Central Board of Indirect Taxes and Customs (CBIC) under the Department of Revenue, Ministry of Finance
  • C. Enforcement Directorate under the Department of Revenue, Ministry of Finance
  • D. Financial Intelligence Unit–India (FIU-IND) under the Department of Revenue, Ministry of Finance

Q4. Under the Income-tax Act, 2025, the term 'virtual digital space' is most accurately described as:

  • A. Only blockchain ledgers and cryptocurrency wallets used to record virtual digital assets
  • B. Any environment, area or realm constructed and experienced through computer technology, including email servers, social media accounts, and online investment or trading accounts
  • C. Only data stored on servers physically located within the territory of India
  • D. Only government-operated digital platforms used for e-filing of income-tax returns and tax payments

Q5. With reference to Section 247 of the Income-tax Act, 2025 as compared with Section 132 of the Income-tax Act, 1961, consider the following statements: 1. Section 247 explicitly empowers authorised officers to override access codes to gain entry into a taxpayer's virtual digital space, a power not expressly provided under the original Section 132 of the 1961 Act. 2. Section 247 mandates prior judicial authorisation from a Magistrate before any search of virtual digital space can be conducted. 3. The powers of search under Section 247 may also be exercised for the purposes of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Which of the statements given above is/are correct?

  1. Section 247 explicitly empowers authorised officers to override access codes to gain entry into a taxpayer's virtual digital space, a power not expressly provided under the original Section 132 of the 1961 Act.
  2. Section 247 mandates prior judicial authorisation from a Magistrate before any search of virtual digital space can be conducted.
  3. The powers of search under Section 247 may also be exercised for the purposes of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
  • A. 1 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3