Reporter’s Collective: How Taxing Philanthro-Journalism Aids Majoritarianism

On January 28, 2025, The Reporter’s Collective, a New Delhi based association of journalists, which recently reported extensively on the Electoral Bonds scheme and the Adani bribery scandal, revealed that the Income Tax Department had refused to extend philanthropic status to it, revoking the tax exemption applicable on non-profits. The move by the Union government led by Prime Minister Narendra Modi aims to  undermine the lifeblood of our constitutional democracy: independent journalism.

To avail income tax exemption under the Income Tax Act, 1961, a trust is required to apply for, and obtain registration. The chief purpose behind a preferential tax treatment of philanthropy is to efficiently increase positive externalities associated with the philanthropic activity, leading to overall social welfare. The appropriate tax authority may refuse to grant registration if, for instance, it is not satisfied about the genuineness of the trust’s charitable activities.

On January 27, 2025, the Commissioner of Income Tax (Exemption) reportedly stated that Reporter’s Collective’s registration could not be granted since it was engaged in promoting and carrying out journalism. The Commissioner’s order, absurdly, noted that journalism could not be considered “charitable” for availing income tax exemption.

Do Reporter’s Collective’s activities fall within ‘general public utility’?
Section 2(15) of the Income Tax Act defines “charitable purpose” as including “relief of the poor, education, yoga, medical relief, preservation of environment and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility.” 

Essentially, seven kinds of activities are considered charitable for availing tax exemption. The first six are per se charitable. The seventh, residual kind is the advancement of ‘any other object of general public utility’. It is this residual category that is of significance in Reporter’s Collective’s case.

The Act does not clarify what constres “general public utility.” But it should be read and understood in light of the first six kinds of charitable activities. To put it simply, ‘general public utility’ means that the activity has a worthy purpose and an element of public character. The latter means that it must relate to a sufficiently large section of the public. For instance, activities that advance private interests or groups, or are harmful to the public at large, are excluded.

The starting point to ascertain whether a trust or an institution has a charitable purpose is to examine the objectives with which the trust or institution has been set up. 

Are the activities to be carried out on a “no-profit, no-loss” basis? Do the activities have a worthy purpose? Will the activities benefit the public at large? 

If the answers are in the affirmative, the activities should be considered to be of general public utility.

The Reporter’s Collective’s main objectives are education and advancement of other objects of general public utility. Other objectives would be to publish news, to carry out research, promote and carry out journalism, and conduct training and educational activities. These are  non-profitable activities since they are conducted on a no-profit, no-loss basis.

Responsible journalism has public utility

Public utility is implicit in philanthro-journalism. The primary role of responsible journalism, either profit or non-profit, in a democracy is to enable an informed and aware citizenry. It also aims to create an ecosystem where there is a free flow of knowledge and ideas, and to act in the capacity of a “watchdog” within the constitutional democracy, particularly as disinformation grows. It aims to act as a catalyst of social and political change. 

Journalism is an essential component of our republican democracy and any trust or institution, set up to promote or carry out journalism on a no-profit, no-loss basis, must prima facie be considered as advancing ‘general public utility’.

The Commissioner never stated that Reporter’s Collective was carrying out a ‘commercial activity’

An activity can be of ‘general public utility’  without being charitable. The Proviso to Section 2(15) of the Income Tax Act states that the advancement of any other object of ‘general public utility’ shall not be a charitable purpose if it involves the carrying on of any activity in the nature of trade, commerce, or business for consideration (“commercial activity”). 

However, the Commissioner’s order revoking Reporter’s Collective’s non-profit status nowhere records that the association is undertaking commercial activities for consideration. In fact, its work likely falls under ‘education’ - the second per se charitable activity enlisted under Section 2(15). Thus,  the “commercial activity” restriction stipulated in the Proviso should not apply at all.

The Income Tax Act also does not envision the concept of a ‘pure’ charity, which is when an organisation carries out a charitable activity without consideration. As per the Proviso to Section 2(15), organisations carrying out commercial activity also can be granted exemption if:

(a) the commercial activity is undertaken in the course of actual carrying out of charitable activities; 

(b) and the total receipts from such commercial activity are not exceeding twenty percent of the total receipts. Here, the selling of goods or services on cost or nominal markup basis may not be considered commercial receipts. 

As noted above, the Commissioner’s Order does not record that Reporter’s Collective was carrying on ‘commercial activities’ so the question as to whether the receipts from any commercial activity exceed twenty percent  of the total receipts does not arise.

The Commissioner has only cursorily denied registration, by stating that journalism does not have general public utility. This demonstrates an arbitrary exercise of power and non-application of mind. 

The truly deleterious effect of the Order is that Reporter’s Collective will henceforth be subject to income tax – like any other assessee – on all its donations. Resultantly, it may stop getting donations because donors would no longer be entitled to tax deduction. 

The Supreme Court has consistently held that the exercise of journalistic freedom lies at the core of speech and expression protected by Article 19(1)(a) of the Constitution. The Commissioner’s Order is, thus, a direct affront to valuable constitutional freedoms, including the citizen’s right to information.

Press freedom under strain

In the last few years under Prime Minister Modi, India has witnessed a major crackdown on media outfits that have been critical of the ruling dispensation. Thus justly explains India’s decline to the 159th position in the World Press Freedom Index. 

In 2023, the NewsClick founder-editor, Prabir Purkayastha was charged under an anti-terror law on vague allegations of the portal promoting “anti-India” propaganda. In February last year, BBC’s India offices were raided by the Income Tax Department weeks after it released a documentary critically examining Modi’s role in the 2002 Gujarat riots. There are other glaring examples.

Within a short span of time, The Reporter’s Collective has run multiple, fact-based investigative reports holding the ruling dispensation accountable on several f issues, including an in-depth report on how the government gave reciprocal benefits to corporations that purchased electoral bonds. It would, therefore, be naïve to view the denial of philanthropic status and the associated tax exemption to The Reporter’s Collective as simply an income tax dispute. 

Rather, this is one of the many examples of a majoritarian government weaponizing tax law to financially jeopardize and cripple independent journalism, and send a chilling message to other non-profit media outfits which have refused to tow the government line.

On February 10, 2025, the Delhi High Court, while disposing of a writ petition filed by The Reporter’s Collective,  has directed the Income Tax Appellate Tribunal to decide the matter expeditiously.

Ashish Goel is a Supreme Court lawyer, specialising in public law and international tax law.