With Indian tax authorities revoking the non-profit status of investigative news outlet The Reporters’ Collective, press outfits and experts on tax disputes have expressed concerns about the financial sustainability of news outlets that could face similar action.
The status was repealed with tax authorities pointing out that “journalism does not serve any public purpose and therefore cannot be carried out as a non-profit exercise in India,” TRC said in a statement released on its website on Tuesday. It said it had existed as a formal registered non-profit trust funded by citizens since July 2021.
Tax authorities have revoked our non-profit status, claiming journalism does not serve any public purpose and therefore cannot be carried out as a non-profit exercise. It severely impairs our ability to do journalism. Our statement: https://t.co/79tTEVW8UR pic.twitter.com/ZXRkCaSMcv
— the reporters' collective (@reporters_co) January 28, 2025
“The order cancelling our non-profit status severely impairs our ability to do our work and worsens the conditions for independent public-purposed journalism in the country,” the TRC statement said.
A pop-up window on the TRC website asking readers to donate announced that the group is “out of funds”. “We have hit a crisis. We don’t have money to pay our journalists. Without urgent support, our investigation reporting is at the risk of disappearing,” it further read.
When contacted for this report, The Reporters’ Collective’s founding editor Nitin Sethi said he could not comment on the recent developments.
Future as well as past donations to be taxed?
The revocation of the non-profit status implies that the group would no longer be exempt from paying income tax, experts told Newslaundry.
“The I-T department order basically means that TRC would now be assessed as a commercial entity and will be given no tax breaks. The group would now have to pay income tax and all the donations made to them would also be taxable,” a senior advocate who specialises in tax disputes said. The senior advocate, who did not wish to be named, added that “donations to the group could now stop as donors would now not have the incentive of getting a tax rebate”.
Donation received by entities registered under section 12 AB of the Income Tax Act is not taken as normal taxable income, and the amount given by donors also gets an exemption in income tax. So after the I-T department’s move, it’s not just future donations but also past donations that can be taxed.
“When an institute is converted into a form which is not eligible for registration or where the registration under Section 12AB is cancelled, then tax can be levied on the net worth of the institute. Under Section 115TD, accumulations that an such institution has made over the years, before the cancellation, can also be taxed,” said Karanjot Singh, a partner at Lakshmikumaran and Sridharan law firm. “When registration (as a non-profit) is cancelled, tax at maximum marginal rate, which can vary between 30 to 42 percent, depending upon the quantum of income, will be levied,” he added.
Agreeing with Singh, the senior advocate quoted above said the revocation of the non-profit status allows the I-T department to collect tax from TRC and its donors retrospectively as well.
In its statement, The Reporters’ Collective said it is seeking legal remedies “to protect the idea of journalism as a public good and our right to carry out investigative journalism, research and training free of encumbrances, fear or threats at The Collective.”
“TRC can approach the Income Tax Appellate Tribunal and file an appeal against the I-T department’s order to cancel its non-profit status,” said Singh.
Move criticised by media bodies, opposition leaders
According to The News Minute, in December 2024, the I-T department had axed the non-profit status of The File, a Bengaluru-based Kannada news website. Indian media bodies fear that more outlets could be targeted similarly in the future.
Dhanya Rajendran, the editor of The News Minute and chairperson of DIGIPUB, said, “We are trying to find how many publishers or digital media outlets have received such a notice. We are aware of two other outlets, who have got a notice, but we believe that more people will be targeted.”
The Reporters’ Collective is a member of DIGIPUB, an association of digital media outlets, as is Newslaundry.
“The government can claim that they are simply changing the taxation structure, but it is clearly a case of harassment. In the past we have seen the government and income tax department going after NGOs telling them that their tax structure does not work, and then asking them to pay tax in retrospect,” said Rajendran.
Countering the I-T department’s purported assertion that “journalism does not serve any public purpose,” Ananth Nath, president of the Editors Guild of India, told Newslaundry, “While we are not privy to exact details of this particular case involving The Reporters Collective, EGI believes that journalism does serve the public when done objectively, without fear or favour,” adding that “public service news organisations are vital for democracy providing independent, fact based journalism free from any interference”.
Echoing Nath, Rajendran said, “What is really astounding is that the Income tax department is claiming that journalism is not for public purpose. Is this the line the government of India is taking?”
Singh of the Lakshmikumaran and Sridharan firm also said that the I-T department could use the same approach against other outlets as well. “Unless we see the fine details of the order itself, we cannot be sure if the order is generic or only pertains to TRC. However, based on the statement put out by TRC, the order appears to be generic in nature, and may set a precedent for future actions. The I-T department may also go after other similarly placed institutes.”
The I-T department directive against TRC comes just weeks after the collective had released a three-part investigative series on how the BJP-led union government allegedly tried to “scrub” India’s global image by tracking and influencing 30 indices that rank countries on hunger, poverty and other development indicators.
Earlier in January 2024, the collective had reported that after becoming the Prime Minister in 2014, Narendra Modi had tried to “hold backdoor negotiations with the Finance Commission to cut tax funds allocated to States.” TRC has also produced several reports on women’s safety, environmental matters, and ethnic conflict in Manipur apart from other issues.
While several journalists have decried the I-T department’s targeting of TRC, many opposition leaders have also criticised the agency's actions.
Congress MP Randeep Singh Surjewala tweeted that the “fascist” Modi government is “inimical to independent media” and “hates free press”. “The pliant, subservient media of today is a poor commentary on the brick by brick, designed obliteration of democracy,” he said.
Congress leader P Chidambaram tweeted that “one more building block of freedom was knocked down today when the Income Tax department canceled the non-profit status of Reporters' Collective”.
One more building block of freedom was knocked down today when the Income Tax department canceled the non-profit status of Reporters' Collective
— P. Chidambaram (@PChidambaram_IN) January 28, 2025
The official reason given is "journalism does not serve any public purpose"
The true reason is that independent journalism does not…
Former TMC MP Jawhar Sircar alleged that the prime minister “unleashes his Income Tax hounds to terrorise the media that exposes his corruption and highhandedness!”
It’s worth noting that in September 2024, the I-T department had repealed the tax exemption status of Aman Biradari, an NGO run by author and human rights activist Harsh Mander, and cancelled its registration under Section 12 AB of the Income Tax Act.
Just four months after it had cancelled the tax exemption status of leading public policy think tank, Centre for Policy Research, the I-T department revoked tax immunities for four NGOs – Oxfam India, CARE India, Legal Initiative for Forest and Environment, and Environics Trust – in October 2023.
In September 2022, I-T officials had also conducted a “survey” at the premises of the Independent and Public-Spirited Media Foundation, a philanthropic organisation that provides financial aid to several digital news outlets.
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