Patanjali is an NGO! Paying Tax? FMCG or Social Entrepreneurship?

What if Baba Ramdev's Patanjali Was Not an NGO And Paid Corporate Tax?

 

New Delhi: Baba Ramdev’s mega fast moving consumer goods (FMCG) firm, Patanjali recently collaborated with e-commerce platforms to expand the reach of its products. The Yoga guru also declared his plan to continue Patanjali as a non-governmental organization (NGO). However, what if Patanjali was a regular company that falls under the ambit of corporate tax?

Corporation tax is a tax levied on the net income of the company. Businesses, both private and public, which are registered in India under the Companies Act 1956, are liable to pay corporate tax currently pegged at 30%. Finance Minister Arun Jaitley in his last Union Budget talked about lowering corporate income tax to 25% in a span of four years for companies registering annual revenue of Rs 50 crore or less. The announcement is yet to be put in practice.

Founded in 2006, Haridwar-based Patanjali Ayurved clocked an annual revenue of Rs 10,561 crore in the financial year end of March 2017. Revenue registered for the financial year 2015-16 was Rs 5,000 crore and Rs 2,007 for the fiscal before that.

The Centre’s total collected tax revenue in the last financial year was Rs 17,10,000 crore. Had Patanjali been paying corporate tax, government revenues would have been close to 17,13,000, an increase of roughly 0.2 percent coming from a single organisation.

However, tax experts explained that there are exemptions and rebates that firms get from tax authorities on account of income generation source shown.

Further, it will be wrong to assume that Patanjali does not pay any tax at all. The basic difference between an NGO and a regular company is non-levy of corporate income tax because an NGO is not supposed to make profits on account of it being a holding company.

“Patanjali is a holding company. Smaller companies under it pay all the taxes for production of ultimate sale of products. Further, Patanjali also pays all other taxes such as service tax etc.,” explained DK Srivastava, chief economic expert, EY, a consultancy.

The Baba Ramdev and Acharya Balkrishna-led FMCG company has products across 50 categories such as pantry staples, groceries, nutrition, skin care and toiletries, with haircare and oral care products being the best sellers.

The NGO has currently partnered with eight e-commerce firms, including Amazon, Flipkart, Paytm Mall, Bigbasket, Netmeds, Grofers and Gurugram-based 1mg.

In addition to being available on the above sites, products will also be sold on Patanjali’s own online marketplace – patanjaliayurved.net.

“At present, Patanjali has an annual production capacity of Rs 50,000 crore,” claimed Baba Ramdev in January 2018.

As claimed by Baba Ramdev during a press conference, Patanjali has created an ecosystem that is capable of settling up to 1 million orders every day. The latest move to launch its own e-commerce operations is reportedly aimed at increasing online sales to around 15% of the company’s total sales.

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Now Organic Dresses – Sarees from Pineapple Fibre!

‘Sourcing raw materials is a tough job’

After trying their hand at various eco-friendly fabric materials stained with vegetable dyes, the weavers of Anakaputhur have come out with sarees made out of yarn from pineapple leaves.

The weavers, mostly women, said the raw materials are available in abundance in the neighbouring Kerala, but bringing them here to make an earning is a tough task.

Over the years, weaving had lost its sheen and is now restricted to only to a few families. Some of the families own pit looms to weave dress materials from natural fibres, with some government support.

Great demand

Self-help groups and members of Anakaputhur Jute Weavers Association these days are busy trying to meet the deadline for bulk orders.

According to C. Sekar, president of the association, dresses woven from natural fibres are in great demand in the country and overseas. “Raw fibre is purchased in bulk from growers in Kerala and we have been trying to get it from the northeastern States too. The fibres are cleaned through a strenuous bleaching process. After a very delicate process of removing single strands of the fibre, they are woven into fabrics like any other material,” he explained.

As the fibre has an affinity for colours, attractive designs can be woven, he added.

Self-help groups can be trained and encouraged to take up weaving of natural fibre such as jute and banana, which is quite profitable. The Indian Bank at Anakaputhur had provided assistance to self-help groups in the area, which included nearly a dozen groups involved in weaving jute and banana fibre. The bank was satisfied with the re-payment capacity of the groups and the the finished goods would be sold at exhibitions organised by Central and State agencies promoting handlooms, besides select private firms.

The price of a saree woven using pineapple fibre starts at Rs. 3,000 and it takes a weaver seven to eight days to make one. “If more support in the form of additional funding is offered, the weavers would thrive to earn a decent living,” he said.

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