Before the amendments introduced by the Finance Act of 2023 (FA 2023), Clause (22B) of Section 10 of the Income Tax Act, 1961 granted exemptions to the income of a notified news agency established in India exclusively for news collection and distribution. However, this exemption was contingent upon the news agency utilising its income solely for these purposes and refraining from distributing income to its members.
According to the FA, 2023, the news agencies are no longer eligible for the exemption under Section 10(22B) of the Income Tax Act with effect from April 1st, 2024.
Government’s Phasing Out Policy:
Aligned with the government’s policy of gradually phasing out exemptions and deductions under the Income Tax Act, the Finance Act of 2023 has repealed the exemption previously available to news agencies under Clause (22B) of Section 10, effective from the assessment year 2024-25.
Insertion of Fourth Proviso:
To formalise this withdrawal, the Finance Act of 2023 has incorporated a fourth proviso to Clause (22B) of Section 10. This proviso explicitly states that Clause (22B) of Section 10 shall not be applicable to any income of the news agency for the previous year relevant to the assessment year commencing on or after April 1, 2024.
Applicability of the Amendment:
This amendment comes into effect from April 1, 2024, impacting the assessment year 2024-25 and subsequent assessment years. As a result, news agencies must adapt to these changes in their financial planning and reporting, considering the withdrawal of the previously enjoyed exemptions.
This will impact Press Trust of India, a news agency that has enjoyed income tax exemption under this clause since the assessment year 1994-95. This exemption has been granted due to the agency’s ownership by multiple newspapers, its non-distribution of dividends to shareholders, and its operation as a not-for-profit company.
News agencies, in light of this change, need to reassess their financial strategies to align with the evolving tax landscape. The Finance Act of 2023, with its amendments, marks a pivotal moment in the ongoing efforts to reform the Indian tax structure.
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