Generative AI Safe Harbour Status Dependent On Function: Government

On Wednesday, the administration informed Parliament that classifying generative AI systems, including chatbots, under the IT Act hinges on their specific operations. Their legal protection depends on the exact services they offer and the functions they execute.

The IT Act remains technology-neutral. Its rules govern all computer resources and intermediaries regardless of their underlying systems, including artificial intelligence, Minister of State for Electronics and Information Technology Jitin Prasada said in the Lok Sabha.

"Whether a particular AI system or service falls within the definition of an 'intermediary' under section 2(1)(w) of the IT Act and is eligible for exemption from liability under section 79 of the Act depends upon the nature of the service provided, the functions performed by such system or service and the applicable provisions of the IT Act and the rules made thereunder," Prasada said in a written reply.

Amended Intermediary Rules

The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2026, were notified on February 10 and came into force on February 20. These rules have strengthened due diligence obligations for intermediaries, particularly with respect to synthetically generated information, including deepfakes and AI-generated content.

The updated regulations require intermediaries to deploy technical solutions to stop the creation and spread of unlawful AI material. They must also tag approved AI content with traceable metadata while warning users about the legal penalties of sharing banned synthetic files.

The government also stated that intermediaries are obligated to deploy automated tools or other suitable technical mechanisms to prevent users from creating, generating, modifying or disseminating synthetically generated information that violates any law.

The government stated that platforms ignoring their duties under the IT Rules, 2021, will lose their Section 79 safe harbour protection. These non-compliant firms will face prosecution under existing laws.

Future Regulatory Framework

A parliamentary question by Lok Sabha MP Manish Tewari prompted this explanation. The Chandigarh MP asked if generative AI tools and chatbots qualify as intermediaries under the IT Act. They also questioned if the government would draft unique rules to separate platforms hosting external data from those creating original material.

The state prefers a consultative path. Officials continue to consult stakeholders on policy, legal and institutional matters concerning new technologies, the government stated. Any future rules will follow standard legislative processes if new laws become necessary, the government added.