Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 15-12-2017 – The provisions on anti-profiteering are contained in the GST law as per following provisions: CGST Act, 2017 Section 171 on Anti-profiteering measures. IGST Act, 2017 Section 20 which stipulate that provisions of the GST Act, 2017 shall apply mutatis mutandis to IGST Act UTGST Act, 2017 Section 21 which stipulate that provisions of GST Act, 2017 shall apply mutatis mutandis to UTGST Act, SGST Act, 2017 Section 171 on Anti-profiteering measures. The Rules for Anti Profiteering are contained in Chapter XV (Rule Nos. 122 to 137) of the Central Goods and Services Tax Rules, 2017. As per Section 171 of the CGST/SGST Act, any reduction in 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. An authority may be constituted by the government to examine whether input tax credits availed by any registered pers
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ent to reduction in rate of tax or allowance of input tax credit. There has been considerable delay in constitution of anti-profiteering authority which took almost five months since GST was introduced and consumers had to face the brunt of inflation and undue profiteering. Now that GST Council has substantially lowered the tax rates on host of items, if the Authority plays its role well, it can be hoped that desirable benefits may accrue to consumers. During the two years of initial transition into GST regime, Anti-Profiteering Authority (APA) will step in and may ask businesses that have not passed on full benefits of reduced tax burden to consumers to make up for such benefit, with interest. The Government is committed to ensure all consumers enjoy the benefit of lower prices of goods and services under GST. Under GST, suppliers of goods and services must pass on any reduction in the rate of tax or the benefit of input tax credit to consumers by way of commensurate reduction in pric
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a comparison thereof will show the benefit passed on due to lower tax cascading. Based on the CBEC advisory, it is understood that major FMCG companies have taken positive steps to reduce the prices of goods resulting from cut in tax rates. This is reflected in the recent rate cut announcements in media by companies which has been possible with the use of technology to monitor billing / invoicing at retail level. Similarly, restaurants are also expected to pass on the benefit because of lower tax rate of 5% in place of 18% or 18% with input tax credit. Government had to take this step as restaurants were not passing on the benefit and there were complaints of undue profiteering. Lowering the rate also makes things simple for businesses as well as consumers. One of the measures to curb undue profiteering could be to take a declaration or undertaking from vendors / suppliers that the due benefits accruing to them because of GST have been passed on. In case of large clients such as public
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cading. It we look at other economies where GST was introduced earlier, the consumer price inflation witnessed a download trend. For example, in New Zealand (introduced in 1991), Singapore (introduced in 1994) and Malaysia (introduced in 2016). However, in Australia, where it was introduced in 2000, there has been a mixed trend with ups and downs. So far as India is concerned, the main reasons behind inflationary trend are complexities in GST law for anti tax cascading effect, lack of knowledge and availment of correct input tax credit, businesses hiking up the prices just before GST, unethical profiteering by some suppliers, lack of implementation machinery, hike in tax rates in GST regime for services, small and unorganized sector not passing on benefits etc. Apart from other reasons, if anti-profiteering measure are implemented properly and monitoring is done properly, it may help curb avoidable inflation, i.e. it becomes crucial for Government today to seriously implement anti-infl
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