Imagine being fined for jumping a red light – on a road where the traffic light was installed only after you drove past. That, in essence, is what India’s Income Tax Department has been doing to dozens of non-profit organisations across the country.

The department has been cancelling the tax-exempt registrations of charitable trusts, societies, and other non-profits by invoking a legal provision that simply did not exist for the years it is being applied to. Many such decisions have been repeatedly struck down. 

In at least 20 cases over the last three years, different benches of the Income Tax Appellate Tribunal (ITAT) – the quasi-judicial body that hears tax disputes – have used words like “whimsical”, “arbitrary”, “invalid”, “wholly fallacious” and “flawed” to describe this practice, according to tribunal orders analysed by Newslaundry. In one ruling, the Delhi ITAT accused a “biased” tax authority of being “bent upon” cancelling registrations “by hook or crook”.

The Central Board of Direct Taxes has not responded to Newslaundry’s questionnaire.

Of the 20 ITAT cases reviewed by Newslaundry, 11 were within the Delhi jurisdiction, four were from Bengaluru, two from Indore, and one each from Mumbai, Pune and Jaipur. The orders – spanning June 2023 to March 11, 2026 – do not represent an exhaustive count. The earliest order was issued in June 2023; the most recent on March 11, 2026.

Beyond these, several prominent organisations have also challenged the retrospective use of Section 12AB(4) before the Delhi High Court and the ITAT – among them Oxfam India, Care India, the Centre for Policy Research, activist Harsh Mander’s Aman Biradari Trust, and Legal Initiative for Forest and Environment. The Income Tax Department carried out searches at these organisations in 2022 and revoked their tax exemptions the following year. These matters are sub-judice.  

Until March 2021, non-profit organisations registered under Section 12AA of the Income Tax Act enjoyed tax exemptions until cancellation. That exemption also meant the organisation didn’t pay income tax, and donors could claim tax deductions on their contributions under Section 80G.

When the government introduced the 12AB regime, civil society groups expressed concerns. They claimed that the new regime could pose a huge administrative burden and could be used as a tool to harass groups critical of the government. 

From April 1, 2021, the government moved to the new system. Under Section 12AB, registrations now had to be renewed every five years. All the non-profits had to re-register.

Then, a year later, through the Finance Act of 2022, the government expanded the grounds on which a non-profit could lose its registration. This new provision – Section 12AB(4) – introduced the concept of “specified violations”: a list of six offences that could trigger cancellation. Among them: using income to benefit a particular religious community or caste, or non-compliance of any other law. These additions took effect from April 1, 2022.

The problem? Tax authorities have been using this 2022 provision to cancel registrations for alleged violations going back years – sometimes to........

© newslaundry