Direct Tax Services
Select Your Location
In this article, we are going to discuss the Anti Profiteering Rules under GST.
They are specified with a view to implementing the anti-profiteering measure specified under Section 171 of the CGST Act, 2017.
In the last few months, tax rates relating to the majority of goods are reduced. As the Section 171 of GST, Act 2017 clearly states, the main objective is to make sure that the benefit of such tax reduction and input tax credit shall be passed on to the end recipient of such goods or services. In many foreign nations, an increase in the prices was observed after the implementation of GST. Learning from the mistakes of such countries, it is a much-appreciated step to introduce these Anti Profiteering Rules under GST.
Table of Contents
These rules specified as per Section 171 of GST, Act 2017 impose a check on two fronts i.e. it states that the benefits of reduction in tax rates, as well as the benefit of the input tax credit, should be finally passed on to the end-user.
After many recommendations and objections from the various business sections, the GST council reduced the applicable tax rates of over 200 products. The main object of such reductions is to pass on the benefits to final recipients. However, there are many traders who may misuse these cuts in tax rates. They may adopt unjust profiteering policies like, just reducing the prices of slow-moving goods and no reduction in the prices of fast-moving goods, thus covering up their average turnover.
However, after the introduction of these anti-profiteering rules, it is required that the manufacturers and traders reduce the prices of such goods and services on which tax rates are reduced by the authorities.
Input Tax Credit can be claimed for the tax paid on input goods or services which contribute the output.
Under some old laws, such credit was available. However, no free flow of such credit was available, as there were any restrictions regarding the same. Introduction of Goods and Service Tax eliminated this issue and ensured the free flow of ITC. Thus eliminating the tax on a tax-related defect in the system. This may result in a reduction in the cost of various goods or services. With the introduction of the provision of reverting back of input tax credit to traders and business houses, it becomes the responsibility of such business houses and traders to make sure that this benefit of GST is passed on to the consumers in the form of reduced prices.
As one of the objects of Section 171 of CGST, Act 2017 is to pass on the benefits of such reduction in cost as a result of input tax credit to be passed on to the ultimate recipient of such goods or services.
It is recommended that anti-profiteering rules should be item-specific. This will have a greater impact and more will give better results in imposing anti-profiteering rules.
As we have discussed earlier that certain business houses just reduce the prices of slow-moving goods and the prices of fast-moving goods remain unchanged. This practice can also be discouraged by adopting a product-specific approach. Under this approach, if any complaint is received by the concerned authorities, they will check the flow of input tax credit in that specific product and its effect on the actual tax liability on that specific product.
Anti-profiteering guidelines on the basis of products are simpler, and as a result of their implementation, it will become easier to map out the entire supply chain of goods or services.
Many experts are of the opinion that a certain level of flexibility is required to be built into the framework as different companies have their unique cost and margin structure, depending on their business. These different cost structures cannot be entirely ignored while deciding the maximum retail price of any goods or services.
On the forefront, anti-profiteering rules are a very appreciable step and will be very effective in safeguarding consumer interests. However, this will increase the work of businesses and government authorities by many folds due to each and every product revaluation and tax effects on the market after the rollout of the goods and service tax.
With a view to investigating anti-profiteering complaints from consumers and compliance of Anti Profiteering Rules under GST, a three-tier authority structure has been made.
National Anti-Profiteering Authority is set on the top of the tier. Senior bureaucrat, Mr. Badri Marian Sharma is appointed as the Chairman of the National Anti-Profiteering Authority (NAA).
State-level screening committees and a standing committee at the national level will also be set up to screen complaints.
For GST registration or any other related services contact Enterslice.
Also, Read: Anti-Profiteering Authority (NAA) under GST.
Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.
Many investors use fixed deposits as their primary investment vehicle. Investors with a high-ri...
The main idea of CDS, which was initially to give banks a way to transfer credit exposure, has...
Black money has been the subject of heated political debate in India for a long time. Successiv...
The Apex Court pronounced a judgement in the case titled Tata Motors Vs The Brihan Mumbai Elect...
Since economies are moving towards digitalisation and making it feasible to conduct transaction...
The Alternative Investment Funds (AIFs) Pro-rata and Pari-Passu Rights Proposal Consultation Pa...
The Financial Action Task Force, i.e. FATF (the Force), is the global money laundering and terr...
Advance tax refers to the payment of the tax liability before the end of the relevant financia...
On 11.12.15, the Hon’ble Delhi High Court (HC) pronounced a landmark judgement in the case ti...
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Are you human?: 2 + 4 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
The Duty-free shops are generally noticed at the departure area of the International airports. They are sort of ret...
10 Oct, 2020
In a normal business cycle, many times goods are returned by the recipient of such goods based on various reasons....
10 Jul, 2017
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!