Income Tax Exemption to Patanjali – The final nail into FMCG’s coffin

This would be the last nail in the coffin for FMCG (Fast Moving Consumer Goods) sector that has already been suffering from demonetisation side effects. The (ITAT) Income Tax Appellate Tribunal has recently provided tax-exempt status to the Baba Ramdev’s Patanjali Yogpeeth (a trust “public charitable trust”). The ITAT has provided the ruling based on its understanding that the trust is involved in imparting “education (Yoga)” and providing “medical relief”. Hence, the same can be exempted from the scope of tax under the Income Tax Act.

Earlier Income Tax Tribunal had ruled against According Charitable Status to Patanjali

ITAT stated in its order “The finding of Income Tax authorities that broadcast of yoga by Ramdev Baba’s Patanjali Yogpeeth cannot be held as eligible as imparting education or medical relief is not justified”.

The order of the ITAT also made certain references to the amendments made in the year 2006 in the Income Tax Act under which “yoga” was specifically given a place within the definition of “charitable purpose”.

The ITAT also stated that the Corpus donations received by the trust are not subject to tax, even if the trust is not eligible for exemption from income tax.

Even Sale of Jeans, Cosmetic Products exempt from Tax- India a Tax Heaven for BJP’s Baba

Not only does Baba Ramdev’s Patanjali use his “yoga” certification to retail everything from Jams to Jeans, Ramdev’s Patanjali Yogpeeth is the peg on which his Fast Moving Consumer Good empire hangs, and the value of its brand beautifully rests.

Patanjali Yogpeeth, distinct a usual public charitable trust, is the doorway to the yoga guru’s (Baba Ramdev’s) FMCG worth several 000’of crores. So, making India a tax heaven for Patanjali Yogpeeth is the present government largesse at its nepotistic and unethical worst.

Is It a Level Playing field for other FMCG Manufacturers?

While one is getting an exemption from tax, how can it be considered a fair play game? Furthermore, it is obvious that demonetization hurt major players in FMCG sector badly including two of the biggest tycoons in FMCG sector such as Nestle Hindustan Unilever Ltd. In the quarter ended in December 2016, it took a very toll on approximately all companies.

FMCG tycoons like Nestle has admitted that it suffers a setback of Rs 100 crore due to the government demonetisation movement and it will require at least 6 or months to prevail over the impacts of “demonetization”. The HUL (Hindustan Unilever Ltd) also has experienced a reduction of 4 % in volume.

Patanjali Set to grow to greater heights…..Net worth exceeding 2.5 Billion Dollars

On the other hand, Baba Ramdev’s Patanjali Yogpeeth witnesses growth of Rs 5,000 crore in revenue during 2015–16. The administrator of Patanjali Yogpeeth Acharya Shri Balkrishna has a net worth of 2.5 billion dollars, according to Forbes magazine. The trust has roughly 30 products in the market, starting from milk powder to variety of fruit juices. With its hard-line pricing, Patanjali Yogpeeth merchandise has already made deep inroads into the revenue of other Multi-National Companies.

Baba in Controversies- well it does not Matter

However, Baba Ramdev’s Ayurveda has been involved in some controversies and was in news headlines for some erroneous reasons.