After Popcorn, GST is Now Looking at Dabur’s Hajmola: Is it a health Product or Just a Sweet?

After recently questioning how popcorn should be taxed, GST officials are now focusing on Hajmola. According to a CNBC-TV18 report, tax officers in Coimbatore are investigating whether Hajmola should be taxed at 12% like an Ayurvedic medicine or at 18% like a candy.

Dabur says that Hajmola is based on Ayurveda and is not just a regular sweet, so it should be taxed at the lower 12% rate. The company had even won a similar case before GST was introduced, when the Supreme Court ruled that Hajmola was an Ayurvedic medicine, not a candy.

Now, this new tax investigation adds to Dabur’s ongoing troubles. On April 1, the company said that it received a tax notice asking for Rs. 110.33 crore for the financial year 2017–18. The tax department claims Dabur wrongly claimed some R&D deductions and made incorrect entries under a section of the Income-tax Act.

On top of that, Dabur is also suffering from business challenges. In its latest update, the company said that its revenue for the March quarter is expected to stay mostly flat. It blamed weak urban demand and rising prices. Profits are also expected to shrink, with operating margins likely to fall by 150–175 basis points.

Dabur said its FMCG (Fast-Moving Consumer Goods) business in India is likely to drop by a few percent. However, sales in international markets like MENA (Middle East & North Africa), Egypt, and Bangladesh are expected to grow strongly, with double-digit increases. Right now, about 25% of Dabur’s total revenue comes from its international business.

A few of Dabur’s well-known products are Chyawanprash, Real fruit juices, Dabur Honey, PudinHara, Lal Tail (baby massage oil), Amla hair oil, and Red toothpaste.