Tax-Exempt Baba Ramdev Charity Used for Investment Parking: Report
A recent investigation by The Reporters’ Collective has found that yoga guru Baba Ramdev and his associates have been running tax-exempt charitable organisations to park money and investments, including in the bankrupt consumer goods company Ruchi Soya, now Patanjali Foods.
In 2016, individuals connected to the Patanjali Group established Yogakshem Sansthan, a non-profit charity aimed at promoting yoga and Ayurveda centres, earning tax-free status. However, company records show that for six years, the non-profit did not engage in any charitable activities. Instead, it was used to hold investments worth tens of crores of rupees, including those made by Ramdev’s close associates in Ruchi Soya, according to the investigation.
There are several restrictions in the tax laws on non-profits earning income through commercial activities and business investments to prevent misuse of profits without paying taxes. However, despite this, Yogakshem Sansthan has avoided any scrutiny over the years and continues to hold investments without performing its stated charitable work.
Previously, The Reporters’ Collective had found that the Patanjali group had created several companies to trade in ecologically sensitive Aravalli forestland under the pretext of setting up Ayurvedic manufacturing units.
Although Yogakshem Sansthan did pay taxes following the substantial income earned from investments held in Ruchi Soya or Patanjali Foods, the firm did not lose its status of being tax-free even after not engaging in any charity work.
With an initial capital of just 4 lakhs, the non-profit was set up by Acharya Pradyumna, Phool Chandra (now Swami Parmarthdev), Suman Devi (now Sadhvi Devpriya), and Savita Arya. The Yogakshem Sansthan was formally set up as a non-profit company to establish and promote yoga centres, healthcare centres for the underprivileged, and educational institutes, as per the company records.
However, the report found that the company never set up any of the above centres on its own.
In 2018, Yogakshem Sansthan received a substantial corpus donation from Ramdev’s partner, Acharya Balkrishna, and others affiliated with Patanjali, totaling Rs 2.065 crore shares of Patanjali Ayurved Limited (PAL) worth Rs 79.8 crore. Owning 98.54% of Patanjali Ayurved, Balkrishna himself donated two crores.
Yogakshem’s 100% shares were then given to Patanjali Sewa Trust, also set up by Ramdev and his associates, with the yoga guru becoming a nominee shareholder of Yogakshem with one share in his name. Both Ramdev and Balakrishna, along with Muktanand, took over the control of Yogakshem while the original owners divested their shares and continued to remain directors on paper for some time.
“We are transforming Patanjali into a non-profit organisation,” said Ramdev, as quoted by the Mint in January 2018. Despite claiming to transform Patanjali into a non-profit, Ramdev and his associates maintained effective control over Patanjali Ayurved by holding these shares through Yogakshem.
The shares were later pledged to banks by Balkrishna, leading to a reversal of the transfer in the 2020-21 fiscal year. Meanwhile, Ramdev”s Patanjali-led consortium controversially acquired Ruchi Soya in December 2019. Subsequently, Yogakshem received Rs 6 crore shares of Ruchi Soya worth Rs 42 crore from Divya Yog Mandir Trust, another non-profit of Ramdev, becoming a 20.28% owner of Ruchi.
Throughout its existence, Yogakshem Sansthan’s ownership frequently changed hands among various Patanjali trusts and its non-profit firms. Despite earning significant dividends from its investments, the non-profit continued to enjoy tax-exempt status without engaging in any charitable work, as per the findings of The Reporters’ Collective.
As per the Income Tax Act, 1961, Yogakshem Sansthan is not required to pay any tax on its income if it uses roughly 85% of it on its charitable works. Furthermore, the non-profit is required to liquidate the shares in a company before the end of the next fiscal year, and the amount is to be deposited in instruments outlined by the tax law.
Yogakshem Sansthan continues to maintain its identity as a charitable organisation under the law while the government continues to maintain its tax-free status. Yogakshem holds a 16.52% stake in Ruchi Soya (now Patanjali Foods), as per its latest financial records.
