The government has told Parliament that whether generative AI systems, including chatbot-based AI services, qualify as intermediaries under the Information Technology Act will depend on the nature of the service and the functions performed by the system. The clarification was given in a written reply in the Lok Sabha by Minister of State for Electronics and Information Technology Jitin Prasada.
The response stated that the IT Act is technology-neutral and applies to computer resources and intermediaries regardless of the underlying technology, including AI. It also said that a particular AI system or service’s eligibility for exemption from liability under Section 79 of the IT Act will depend on the applicable provisions of the Act and rules made under it. The clarification came in response to questions on whether generative AI systems should be treated as intermediaries and whether separate guidelines are planned to distinguish systems that facilitate access to third-party content from systems that independently generate content.
The government also reiterated that intermediary due diligence obligations remain relevant for AI-generated content. The current compliance framework requires intermediaries to make reasonable efforts to prevent users from hosting, displaying, uploading, modifying, publishing, transmitting, storing, updating or sharing unlawful content. The reporting also noted obligations around labelling permissible AI-generated content and the consequence of non-compliance, including possible loss of liability protection and exposure to legal action under applicable law.
The clarification is significant because India’s AI market is moving quickly across enterprise copilots, customer-service bots, workflow agents, consumer chat interfaces, code generation tools, content systems and vertical AI platforms. These services do not all perform the same legal or technical function. Some may primarily transmit, host or organise third-party material, while others generate outputs, take action inside enterprise systems, or combine user input with proprietary model logic. The government’s position indicates that liability treatment will turn on service design and function rather than a blanket classification for all AI systems.
For platform companies, SaaS vendors, AI startups, enterprise buyers and compliance leaders, this reinforces the need to map AI product architecture to intermediary obligations, content controls, auditability and user-facing disclosures. It also keeps open the possibility that different AI services within the same company may be treated differently depending on their function. The clarification does not by itself create a standalone AI law, but it places generative AI squarely within the existing IT Act compliance frame while India continues to evolve its AI governance approach.
