Goods and Services Tax

Anti-Profiteering provisions – How far desirable? Anti-Profiteering provisions – How far desirable? Anti-profiteering provisions under GST-How far desirable

Goods and Services Tax – GST – By: – Srinivasan Krishnamachari – Dated:- 4-12-2017 – There is a new provision Section 171 in the CGST Act read with Rules 122 to 137 of the CGST Rules that enable the Government to constitute an authority to monitor the prices that businesses charge for goods and services, following the introduction of GST and reduce it commensurate to the GST gains , if not passed on already to consumers. This is in line with the Constitution of India providing for price control in the concurrent list or what is otherwise called as List III of Schedule VII of entry 97 where among other things dealt therein, taxation matters are one. The fact that Center and States have concurrent powers to legislate from list III did not however witness either of them making any anti-profiteering Legislation except in 1958 by the West Bengal Government though unsuccessfully and now after a lapse of 59 years by the Centre under the GST law. The cue one gets from an old historical enactm

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ST. It is also felt at the same time that it will be too difficult like finding some needles in the haystack, to pinpoint those who profited in a given case of reduction in the post GST scenario compared to before and after the tax change. Further, the job of such an agency will be even otherwise pretty much difficult since reduction in prices could be genuinely attributable to very many factors other than a rate reduction as it is fervently believed by the Government. May be it is good to have such an Oversight Agency in place lest the prospect of a progressive reduction in rates on the successful functioning of GST should lead to profiteering tendencies among businesses. Well, in that sense it is good to have it but not good enough if the Government went with the hare of reform and hunted hard with the hound of Anti-Profiteering measures. The only fear is that the GST engine should not get derailed by its own bogies of business as the smooth running of business in a co-operative envi

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

only in 14 cases across the country. Will you believe it and that too only on specific study and information that gains were made but were not parted to the consumers? The result was that they were left with good enough time to gather adequate price data bearing upon taxes such that they could persuade business to pass on the tax benefits to the people in the form of reduced prices. Even the Malaysian experiment reveals that the country prepared the business and people for two long years before GST could be introduced as a unified central tax at a meager rate of 6%. The Malaysian Customs Department provided enough education and software support of accounting packages to business, tuned to handle GST with ease unlike the unfortunate Indian experience of glitches ridden electronic framework that GSTN has come to acquire. It is very unfortunate that the government should notify the NAA authority just now, and at the same time trying to simplify GST to avoid the kind of harassment that mil

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

what business considers a normal profit may be treated as profiteering by the Government. Profit is considered a legitimate reward for risk taken by the business. Profit is normally influenced by variety of factors like operational efficiency, demand-supply proposition, a new market advantage, Price penetration, seasonality of a product or services so on and so forth. In such a situation, if a businessman earns a slightly higher profit it would not perhaps require under Anti-profiteering clause to pass on the benefit to his customer always? There is no straight formula prescribed under the regulations to quantify the impact of input tax credits or the reduction in the price on account of any reduction in the tax rate with the final prices of goods or services. How to deal with this under GST remains a big question mark? It is important that we understand fully the background to the introduction of a GST into Australia and Malaysia is important as to why anti-profiteering measures were

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

businesses should be commensurate with the relevant market sensitivities, expectations and acceptance. As noted by the Chairman of the ACCC, any well informed, competitive market operating in a climate of low inflation and good corporate citizenship can alone ensure that the vast majority of businesses will act fairly. For most Indian businesses, complying with these provisions is no small matter. It is reasonable to expect that in a dynamic, competitive and diverse market such as India, market forces will ensure that any reduction in an Indian business cost base on account of the GST will flow through to lower prices As part of anti-profiteering strategies for business, they must be encouraged to follow non profiteering policies by first providing them with a) Adequate tools and GST awareness to correctly ascertain their pricing. b) Cost valuation mechanisms for business, c) Transaction valuation computation tools d) GST awareness sessions, As part of consumer Awareness programme, Con

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

argely the template of superimposition of the present central and state taxes and rounding off all the rates to the nearest higher percentage, as understood from the FM s recent remarks. As can be seen, the gap between the old rate and the new being so narrow except perhaps in the 178 items shifted with effect from 15th November from 28% to 18% and a few others from 18% to 12%, that it is tough to take any anti-profiteering measure at this instant. In fact, it is argued that the entire tax fitment exercise cuts the aggregate of the old taxes so fine in relation to the new rates and careful blocking of ITC in many cases, that it would almost leave one with no big gain accruing due to the change that it should be termed unlawful. However, whatever be the gain, it is appealed to the business of India to join hands with the Government in tackling inflation and price rise by emulating the best International tax practices of both payment and compliance of taxes. The idea is millions of India

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Leave a Reply