The Indian government’s Goods and Services Tax (GST) authorities are taking a closer look at Dabur’s popular digestive product, Hajmola, to determine its GST classification. The issue at hand is whether Hajmola should be classified as a medicine or a candy, as this will affect the tax rate applied to the product. If classified as a medicine, Hajmola would be subject to a GST rate of 5%, whereas if it is considered a candy, the tax rate would be 18%.
The Directorate General of GST Intelligence (DGGI) has initiated an investigation to determine the correct classification of Hajmola. The authorities are analyzing the ingredients, packaging, and labeling of the product to make a decision. Dabur, the manufacturer of Hajmola, claims that the product is an ayurvedic item that aids digestion and is not a candy.
However, GST officials are not convinced, and the classification of Hajmola has become a contentious issue. The product contains a mixture of herbs and spices, including ajwain, pudina, and saunf, which are commonly used in traditional Indian medicine. On the other hand, the product is packaged and marketed in a way that is similar to candies, which has led to the GST authorities’ confusion.
The outcome of this classification test will have significant implications for Dabur and other manufacturers of similar products. If Hajmola is classified as a candy, Dabur may be required to pay a higher tax rate, which could impact the company’s profitability. On the other hand, if the product is classified as a medicine, it may be subject to stricter regulatory requirements.
This is not the first time that the GST authorities have faced challenges in classifying unusual products. In the past, there have been debates over the classification of products such as popcorn, which was initially classified as a food item but later reclassified as a candy. The classification of Hajmola will set a precedent for other similar products and will help to clarify the GST rules for the industry. Ultimately, the decision will depend on the specific characteristics of the product and the intended use by consumers.