Making a living out of donations

A wag once said, “Mother Teresa lived for charity but Princess Diana made a living out of charity.” Nirmal Singh Narula aka Nirmal Baba, over whom people seem to be swooning, however makes no bones about his vocation. He charges Rs 2,000 per query through a prepaid entry ticket purchased from specified banks, and pays tax on the profits.

By his own admission, the annual gross receipts are in the region of a whopping Rs 230 crore. He has not floated any trust, and his is a proprietary business, he says, with a thinly disguised smirk alluding to the widely prevalent practice in India of enjoying tax-free income with a fig-leaf of charitable purpose that includes education and medicare so long as profits are recycled for charitable purposes.

Section 12 of the Income-Tax Act, 1961 deems voluntary contributions received by charitable and religious trusts as their income, but makes an exemption in favour of voluntary contributions with specific directions that they are meant for the corpus of the trust.

Tirumala Tirupathi Devasthanam (TTD) makes things easier for the devotees by sparing them the trouble of making such directions — the notice board at the entrance of the temple does this collectively for all the devotees — though commonsense tells that nobody makes contribution to corpus with as low as a ten rupee note.

The elaborate farce, countenanced by law, however, is to steer clear of trouble from the taxman as to utilisation of the contributions. Explaining them away as towards corpus preempts such a query. Be that as it may.

In the limelight

One may accuse Nirmal Baba of enacting a charade by asking his devotees to seek salvation from golgappas and green chutneys, but his claim of collecting his fees above board transparently through banking channels without resort to public trusts is bound to strike a chord.

There is a righteous anger in some quarters that he is a trickster, pure and simple, and preying on the gullibility of the laity. But he counters this charge by ultimately saying that unlike others, he pays his taxes, period.

Quite a few TV channels are doing a roaring business themselves, riding piggyback on him and telecasting his darbars for a hefty fee which, he says, he pays happily from out of the fee he, in turn, collects from the audience.

Incidentally, he has other expenses like rent for the darbar halls and salary to the bouncers he is alleged to be employing. Like a true enterprise, he says, he pays tax on the profits from his advisory services.

The government perhaps might see wisdom in increasing its share from the circus by calling the whole thing entertainment and imposing entertainment tax.

Tax harvest

Of course, this would throw up a heated debate on jurisdiction of various States to levy this tax, given that entertainment tax is within State governments' purview.

The newly mandated set-top boxes might help a bit as far as the four metropolitan cities are concerned in that they can give an accurate account of viewership and from where, but that would still leave States squabbling over viewership at other places.

Whatever happens to States, as far as Baba is concerned, he would most likely pass on the burden of entertainment tax to his fawning devotees

What perhaps would not engender such a heated jurisdictional row would be service tax, which the Centre would be justified in imposing, though that too can be passed on to his fawning devotees. He is admittedly offering services, and the kind of service he is offering does not figure in the short negative list of 17 services made by the Finance Minister in his Budget 2012. He is a consultant, pure and simple.

One hopes for the sake of the Government that the stand of entertainment does not foreclose services.

Let not, then, the government lose sleep over his perceived antics but instead put its own shovel into his empire and make a rich tax harvest. Parallel can be drawn between Nirmal Baba and the annual IPL cricket circus.

It might be viewed more as a nuisance by some right-thinking people, but the government is getting a lot of revenue from it, though some State governments, in their overzealousness, have exempted the games played in their States from entertainment tax.

Meanwhile, the Baba bristles each time he is accused of being a conman. Payment of income tax vests his vocation with dignity, is his counter. Well, let him make the hay while the sun shines.

(The author is New Delhi-based chartered accountant.)

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