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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 .....

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nt of anti-profiteering from within our own country is that it should not kill the mother Legislation itself for whose protection it is supposed to stand. The function of the anti-profiteering Authority is to examine the business cost base to ascertain the actual fact. If it is found that any business does not pass on the tax gains made resultant upon a reduction in the tax rate or enhanced availability of ITC due to introduction of GST, it should initiate action to recover those fortuitous gain .....

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T. 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 s .....

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onment is essential for the GST to kick in successfully. Though the oversight agency has been formed under the CBEC, an outside organization like the Competition Commission of India would have been a more suitable choice many think. It has reportedly both previous experience and expertise to handle such an assignment except for its lack of access to relevant price data in the Post GST scenario to arrive at its conclusions. That any way would appear the duty of the Government to make available su .....

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nly 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 G .....

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ions of producers and traders are likely to face, consequent to the strict enforcement Anti-profiteering Law, which is said to be without specific guidelines/formula to work out the measure of tax gains on account of GST rate cuts and extension ITC benefits. Therefore, how much the National Anti-profiteering Authority (NAA) would help translate the impalpable rate reductions and ITC gains into measurable price gains for the people is a question only time can answer, is what one hears many expert .....

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hat 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 t .....

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mportant in those countries. Both countries moved from a small and limited manufacturing and wholesale sales tax system on goods (and in Malaysia s case, some services) to a broad based GST as opposed to India having the largest manufacturing and wholesale and retail tax system with a full-fledged negative list Service tax regime. It is notable that the fundamental rule adopted in Australia and Malaysia for complying with the respective anti-profiteering rules was based on a net dollar profit ru .....

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usinesses 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 f .....

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umers are to be empowered though initiatives like: a) Releasing shopping guides with expected price lists for major retail items, b) Re-tweaking Maximum Retail Price (MRP) for consumer products, c) Setting up GST Price information Cell to communicate prices to the consumers on real time basis, etc. The empowered authority, entrusted with the functions of monitoring profiteering under GST shall first formulate a procedural method to clearly demarcate and identify profiteers from the rest. For thi .....

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