Rice brand India Gate is now a zero-tax product
NEW DELHI: India Gate, the country’s largest selling rice brand, is exempt from paying goods and services tax (GST) because the company did not get the brand name registered under the Trade Marks Act 1999.
“This is to further clarify, declare and certify that ‘India Gate, Indian Farm, Lotus and Unity’ brands are owned by KRBL Ltd but since they are not registered in Class 30 under ‘Trade Marks Act, 1999’ hence ‘NIL’ GST rate is applicable on it,” KRBL Ltd, which sells India Gate packaged rice, said in an internal communication dated July 3.
Branded rice was either exempt tax or carried a 5% value added tax, depending on the state where it was sold, before GST was implemented. Following the implementation of the indirect tax on July 1, such products have become dearer in many states. KRBL’s largest competitors including the Indian unit of McCormick and Co, which sells Kohinoor packaged rice in India, have to pay GST, making their products more expensive.
KRBL’s rivals have been critical of the country’s largest rice brand not paying the 5% GST that is applicable on branded staples. They have also raised doubts on whether the definition of “registered brand name” has been interpreted correctly by the firm to claim the GST exempt status.
A KRBL spokesman said the company is following government norms. A spokesperson for McCormick in India declined comment.
The finance ministry on July 5 clarified that ‘registered brand name’ is a brand name or a trade name “which is registered under the Trade Marks Act, 1999” and should be on “the Register of Trade Marks and remain in force”.
That KRBL does not have the brand registered wasn’t for lack of trying. The company has applied for trademark registration of India Gate brand of rice and other staples multiple times since 1999 before the Controller General of Patents Design and Trade Marks, according to the website of Intellectual Property Office of India. Its applications were either objected to, opposed or refused. Vikram Roller Flour Mills Ltd was the last to hold the trade mark registration of India Gate brand. The registration was valid till November 2013, according to the website. It couldn’t be immediately ascertained whether it still owns the brand. Calls to the company’s landline weren’t answered. Vikram Roller still sells wheat flour under the India Gate brand.
According to a previous July 2 statement by the finance ministry, GST on staples such as rice, wheat and cereals is zero.
Abhishek Rastogi, partner at law firm Khaitan & Co, said it is possible for a firm to sell the product under a brand name and still claim zero GST. “If the name is not registered under the Trade Marks Act 1999 and not listed with the Registry of Trade Marks, the brand will not attract GST.”