Baba Ramdev’s Patanjali Yogpeeth Wins Tax Battle, Exempted From Paying Income Tax; But Patanjali Ayurved Will Pay Tax

In an interesting judgement by a Govt. designated tribunal, it has been declared that Baba Ramdev’s Patanjali Yogpeeth will not pay any income tax because it is a public charitable trust related with the education of Yoga.

However, a considerable amount of confusion exists among the media and public at large as a result of this decision, as it is being assumed that Patanjali Ayurved, Rs 3000 crore worth FMCG company has been exempted from paying tax; which is wrong. Patanjali Ayurved will continue to pay the taxes, as determined by the Income Tax Department.

It is Patanjali Yogpeeth, a separate charitable trust which has been exempted from paying tax.

Yoga Tag Triggers Tax Relief

Baba Ramdev’s Patanjali Yogpeeth had filed a case with Income Tax Appellate Tribunal (ITAT), seeking income tax exemption on the ground that it teaches and encourages Yoga. In the Finance Bill of 2015, Govt. of India had added Yoga as one of the causes for tax exemption under Section 11 and Section 12 of the Income Tax Act.

In their judgement, the Tribunal said, “The finding of I-T authorities that propagation of yoga by Patanjali Yogpeeth does not qualify as medical relief or imparting of education is not justified,” , adding that both providing ‘medical relief’ and ‘imparting education’ falls under the charitable purpose, which means tax exemption under the Sections 11, 12 of the IT Act.

Interestingly, the insertion of ‘Yoga’ (education, practice, medical relief) as a factor for tax exemption came into effect since April 1, 2016, and it was referenced by ITAT in its judgement.

However, the case related to tax exemption was filed by Patanjali Yogpeeth last year. Thus, it seems that some new rules are made after the filing of the case, and opposition parties may use this factor to target the Govt, accusing them of partiality towards Baba Ramdev’s organisation.

Baba Ramdev Misusing Tax Exemption Rules?

While announcing the judgement related with tax exemption case, ITAT dismissed or ignored two crucial investments made and received by the Patanjali Yogpeeth, and this can again snowball into a major controversy very soon.

The first among them is the donation of Rs 43.98 crore received by Patanjali Yogpeeth for the construction of cottages under ‘Vanprasth Ashram Scheme’. ITAT has provided a tax exemption for this donation, saying, ‘Corpus donations are not taxable, even in circumstances where the trust is not eligible for I-T exemption..”

Besides, a sum of Rs 96 lakh has also been questionably let-off by the tribunal, which was earned by Patanjali Yogpeeth for providing services to Vedic Broadcasting in which Acharya Balkrishna has a majority stake. ITAT in its judgement said that they had not ‘understood the facts’.

As per some sources, Income Tax Dept is expected to file a counter case against this judgement, so as to bring Patanjali Yogpeeth under the tax regime. We will keep you updated as more details come in..