Yoga becomes tax-free: Is this Budget item a sweetheart deal for Baba Ramdev?

The Finance Bill, 2015 adds ‘yoga’ as one of the charitable purposes begetting income tax exemption.

Congress party spokespersons have pounced on this to mount an attack and label this largesse as Baba Ramdev specific. Ramdev is considered to be close to the party.

Yoga will now be in the distinguished and esoteric company of relief to poor, medicine and education among others. The common perception is relief to poor alone is charity but the Supreme Court had made it clear long ago that profit motive is not antithetical to charity under the scheme of the income tax law. So much so, sundry film stars and politicians own colleges and other educational institutions in states like Tamil Nadu and Maharashtra. Not only do these institutions earn considerable tax free income but also facilitate money-laundering with black money mixing freely and seamlessly with white. There is nothing charitable about our educational institutions and hospitals enjoying tax-free status. These institutes invariably fleece their customers, which adds to  public anger and resentment.

Yoga aficionados can argue with justification that if charlatan educationists can enjoy tax exemption, so can yoga institutes. What is more, in addition, newspapers, ports etc have got tax exemption under the residuary, if not omnibus, objects of general utility clause in the definition of charitable purpose given by section 2(15).

Exemption opens the floodgates for relentless and hectic lobbying. Ideally, the tax exemption must be restricted to relief to poor. Equating charitable purpose with a laudable purpose is always fraught. But then charity in our country has come to acquire political overtones, with the exemption conferring enormous clout to politicians as well as the rich and famous. Charity provides the fig leaf for many an unedifying activity where altruism is nowhere in sight.

It could well be the turn of vipasa enthusiasts to claim this hallowed status should the Congress party return to power with Priyanka and Rahul making no secret of their admiration for this form of brain-stilling.

The moot question is what does the exemption to yoga portend and take within its sweep? Standalone yoga activities would definitely enjoy this exemption without any doubt. But would profit from sale of ayurvedic products often forming an adjunct of yoga activities as is the case with Ramdev’s Pathanjali Yoga organization also make the grade for exemption?

One wishes Jaitley had been more specific. The ambivalence engenders arguments both for and against extending the exemption to allied activities. It is worth noting in this context that the residuary clause, objects of general public utility, rules out exemption to business activities unless they are integral to the main purpose and rules out indulgence to business activities if the Rubicon is crossed—20% of the total income.

It also remains to be seen if the term yoga is interpreted broadly or given a restricted meaning. If it is the latter, Sri Sri Ravishankar, the proponent of Art of Living that has for its centerpiece sudarshan kriya, could well be in trouble with a tax officer putting his foot down and saying that only the pristine form of yoga was contemplated while carving out the exemption.

Even if only the pristine and original form of yoga was contemplated, it would be wrong to label it as an indulgence to Ramdev. For, there are many others teaching yoga quietly without fanfare, without TV cameras focusing on them.