Wrongful Disclosure of Taxpayer Data by Public Servants: Finance Bill Eases Penal Provision u/s 280
The previous provision specified a more severe penalty, condemning officials to a fine and up to six months in jail for wrongful disclosure.
The Finance Bill, 2026 has proposed relaxation in the penal consequences for wrongful disclosure of tax information by public servants by amending Section 280 of the Income-tax Act, 1961. As per the amendment, the existing punishment of imprisonment which may extend up to six months along with fine is proposed to be substituted with a lighter penalty of simple imprisonment up to...
The Finance Bill, 2026 has proposed relaxation in the penal consequences for wrongful disclosure of tax information by public servants by amending Section 280 of the Income-tax Act, 1961.
As per the amendment, the existing punishment of imprisonment which may extend up to six months along with fine is proposed to be substituted with a lighter penalty of simple imprisonment up to one month, or fine, or both.
The change is scheduled to take effect retrospectively from 1 March 2026, once the Finance Bill is enacted.
Section 280 of the Income Tax Act, 2025 states about the unauthorised disclosure of taxpayer information by public servants, which is sensitive and confidential in nature.
The previous provision specified a more severe penalty, condemning officials to a fine and up to six months in jail for wrongful disclosure.
The proposed amendment recalibrates the penalty structure by reducing the maximum imprisonment term and introducing greater flexibility for courts to impose either fine alone or combined punishment depending on the facts of each case.
Existing Provision
280. Disclosure of particulars by public servants.
“If a public servant [furnishes any information or produces any document in contravention of the provisions of sub-section (2) of section 138] [ Substituted by Act 5 of 1964, Section 43, for " discloses any particulars, the disclosure of which is prohibited by section 137" (w.r.e.f. 1.4.1964).], he shall be punishable with imprisonment which may extend to six months, and shall also be liable to fine.”
Proposed Amendment to S. 280 as per Finance Bill, 2026
“In section 280 of the Income-tax Act, in sub-section (1), for the words “imprisonment which may extend to six months, and shall also be liable to fine”, the words “simple imprisonment up to one month, or with fine, or with both” shall be substituted and shall be deemed to have been substituted with effect from the 1st day of March, 2026.”
The proposal of lesser punishment for wrongful disclosure of the taxpayer data, which is sensitive and confidential, is a trivial issue, however, the government is intending to relax the penal provisions.
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