Goods and Services Tax – GST – By: – Mallikarjuna Gupta – Dated:- 23-3-2018 – Goods and Service Tax is implemented in India from 1st July 2017 and the major feature or the advantage of GST is the availability of seamless credit of taxes across the supply chain and rationalization of the tax rates. To ensure that the trade and industry passes the same to the end consumer, the Government has introduced the Anti-Profiteering provision wide section 171 of the CGST Act 2017. As per Section 171, sub-section (1) Any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. . In the erstwhile tax regime, input tax credit was not available for all the taxpayers for all the taxes like Central Excise taxes input tax credit was not available to a distributor or a retail trader and similarly Service Tax input credit was not available to the VAT taxpayers. This has resulted in an
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7. Profit is the reward for the risk undertaken by the entrepreneur and it is legitimate but antiprofiteering is unjust enrichment of customers benefits. Anti-profiteering is not a new concept in India or across the globe, it is time-tested and implemented across the globe at one point in time and in India also we had similar provisions in the state of West Bengal. We have taken a clue from various countries which have implemented GST / VAT Across the globe and based on that Anti-profiteering provisions are given in the law. There are various models followed governments across the globe and the two major ones are Net Profit Method – implemented and followed in Malaysia, in this model the net profit percentage is frozen pre-rollout of GST and the same is maintained post-rollout. This ensured that the input tax credit benefit is passed on to the end consumer. Unit Price Method – implemented and followed in Australia and in this, the unit profit per unit is pre-determined and the same is
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ar provision is there in the Australian anti-profiteering where prices can be escalated by 10% to factor such cases. A few days back there were bills which were going viral in the social media that the prices have been jacked in spite of the reduction in the tax rates, this can be amounted to anti-profiteering by many in the public domain, the real fact will be known only after the investigation are completed by the concerned authorities. To ensure that the trade and industry pass the benefits of reduction of tax rates as well as the additional input tax credit benfit, the government has notified the Anti-Profiteering Rules in Chapter XV from Rule 122 to 137 of the CGST Rules 2017. The government has also released a form for filing of the complaint. Though the form is released for the filing of the complaint, it is very complex and the common man cannot file it as it asks for the breakup of the taxes under Central Excise, VAT etc., which the end customer will not be aware of it. The fo
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ng a proper investingtion and the confirm the same. The complaint has to be investigated by the Director General of Safe Gaurds within a period of three months and if addiontal time is required, the same has to be extened by the Stannding Committee for another period of maximum three months. Once the investigation is completed by the Director General of Safeguards, the report is forward to the National Anit-Profiteering Authority (NAPA). The NAPA consists of 5 members, one of them is the Chairman and the other four are Technical Members. NAPA has to conclude on the complaint received from the Director General of Safeguards within a period of three months from the date of receipt of the report. The NAPA will give an opportunity to for both the parties for hearing and after that it confirms the benefit is not passed on, the order is issued with any of the following recommendations the reduction of the prices Ask the registered taxpayer to return the execs amount charged with 18% interest
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by the government again Have dual MRP method of prices one pre-GST and another Post GST, as this will give more transparency to the consumers. Similar case for tax rate reductions. For the benefit of the trade and industry, there should be a provision for including the price increases also which are beyond the control of the trade and industry. The government can also monitor the same with the transaction data it has from the monthly returns filed under GST for the price comparison. The industry should also maintain the proper information for support of the price determined by them and should be reviewed from time to time considering the tax rates impact. It is really a herculean task but not an impossible task to determine the reduction of the cost on account of additional ITC in the supply chain, reduction of taxes and taxes subsumed in GST. Many of the taxpayers are of the assumption that there is no change in the pricing as they were taking ITC in the erstwhile tax regime and now a
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for a long time. The loyalty of the customer shifts from the brand I to brand H of company A Ltd. This is one of the products I have seen in the departmental store for the reduction of the GST, this is how this company is publicizing the price reduction. It is a known fact that cost of acquisition the customer is very high and retaining the customer is also high. Here the cost benefit analysis is also not required as it is a statutory obligation and also as part of the corporate governance it has to adhered. Anti-profiteering is not to be seen as anti-business but it can be used as a tool to improve the market share and profitability on account of volumes and lesser spend on the marketing costs. This benefit is available only for the corporates who act proactively and the early adopters. Industry should follow these points to avoid receipt of notices from director general of safeguards Pass on the benefit of the tax rate, where ever applicable, in case of reduction of tax rates, the MR
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