The government said Twitter had not met the provisions of the new IT rules.
Twitter has been given a final chance to appoint India-based officers following the country's new rules for social media companies, failing which it will face "consequences", the government said on Saturday amid an escalating standoff with the platform.
"Twitter Inc. is hereby given one last notice to immediately comply with the Rules, failing which the exemption from liability available under Section 79 of the IT Act, 2000 shall stand withdrawn and Twitter shall be liable for consequences as per the IT Act and other penal laws of India," the government said.
The move came on a day when a new flashpoint emerged in the face-off between Twitter and the government following the brief removal of the "blue tick" verification badge from the personal account of Vice President Venkaiah Naidu since it had not been logged into for six months.
Described as "outrageous" by government sources, it signalled a further deterioration of ties between Prime Minister Narendra Modi's administration and Twitter who have clashed over a range of issues including its stand on the new rules for social platforms and the discrediting of certain BJP leaders' tweets.
The government's threat about revoking Twitter's indemnity under Section 79 of the IT Act means that the platform could be held responsible for content posted by users. Currently, Twitter and other social media platforms, as intermediaries, enjoy the protection that holds users responsible for posts deemed illegal.
Twitter has been battling with the Indian government since February after the technology ministry asked it to block content alleging PM Modi's administration was trying to silence criticism related to farmer protests in the country.
Following that showdown, India announced new rules that aim to make social media firms more accountable to legal requests for swift removal of posts and require the appointment of an Indian grievance officer to deal with complaints.
Last month, Twitter classification as "manipulated media" of the posts by BJP leaders targeting the opposition Congress drew a sharp response from the government, which sternly asked the site to undo the label, calling it "an overreach and prejudicial".
The controversy led to Twitter flagging concerns about freedom of expression and the safety of its staff in India after police visits to its offices in the capital.
Following the new government rules, Twitter said it has appointed an interim grievance redressal officer, but has yet to name a compliance officer and a nodal officer. Disputing the company in court, the government said Twitter has not met all the conditions of the new law.
Besides Twitter, the new IT rules have spurred also spurred a legal challenge from Facebook-owned WhatsApp which said the government was exceeding its legal powers by enacting rules that will force the messaging app to break end-to-end message encryption.
Read the full text of the government's notice here: