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IMPLEMENTATION OF ANTI-PROFITEERING LAW IN GST

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 6-12-2017 - Anti Profiteering, as the name suggests, is a check against profiteering - something which ought to be ethical but is now a legal issue in Goods and Service Tax. Concept of anti-profiteering measure While every business would like to earn more and more profits from business, given an opportunity, it is a fact that GST is a new concept being introduced in India for first time and claimed as a major tax reform and that e .....

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ns. 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 person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. Objective .....

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x credit to the consumer by way of commensurate reduction in prices. Authority for anti-profiteering regulation The power has been given to Central Government to constitute an authority to oversee whether the commensurate benefit of allowance of input tax credit or reduction in the tax rates have been passed on to the final customer. Section 171(2) of the GST Act provides for establishment of an authority for an anti-profiteering clause in order to ensure that business passes on the benefit of r .....

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and shall have four technical members from the Centre and/or the States. The National Anti-profiteering Authority shall be responsible for applying anti-profiteering measures in the event of a reduction in rate of GST on supply of goods or services or, if the benefit of input tax credit is not passed on to the recipients by way of commensurate reduction in prices. The National Anti-profiteering Authority shall be headed by a senior officer of the level of a Secretary to the Government of India a .....

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check any undue increase in prices of products of companies under GST. The NAA will work to check any undue increase in prices of products by taxpayer companies under the GST regime. It will work in a three-tier structure - a Standing Committee on Anti-profiteering as well as State-level Screening Committees. The National Anti-Profiteering Authority would consist of five members, including a Chairman. It will also constitute State-level Screening Committees, which will have one officer of the St .....

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rmat, before the Standing Committee on Anti-profiteering if the profiteering has all - India character or before the State Screening Committees if the profiteering is of local nature. As per rule 127, NAA shall be duty bound to: determine whether any reduction in rate of tax on any supply of goods or services or the benefit of the input tax credit has been passed on to the recipient by way of commensurate reduction in prices. identify the registered person who has not passed on the benefit of re .....

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sequent to reduction in rate of tax or allowance of input tax credit. 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. National Anti-Profiteering Authority (NAA) shall act as a monitoring and regulatory authority to curb anti-profiteering practices of tax payers under GST regime. The NAA shall have po .....

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of authority may be for any of the following: Reduction in prices Returning money to the customer along with interest Depositing money in customer welfare fund in case the customer does not claim it or is not identifiable Imposition of penalty equivalent to the amount of profiteering Cancellation of registration Union Cabinet has on 16th November, 2017 cleared the setting up of GST National Anti-profiteering Authority (NAA). The post of Chairman and members of the authority have been created pa .....

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10 November, 2017, GST Council decided to lower the GST rates of about 200 items in different categories. In 178 cases, it was lowered from 28% to 18% including FMCG items. With this, there are now only 50 items in 28% bracket (w.e.f. 15 November, 2017). The National Anti-Profiteering Authority is an assurance to consumers. If any consumer feels the benefit of tax rate cuts is not being passed on, he can complain to the authority. The body is mandated to ensure that the benefits of GST rate redu .....

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s may go to consumers. Restaurants are one of such examples where there are complaints of non-passing of the benefit to consumers. Except restaurants in big hotels, GST has been lowered from 18% to just 5% with no input tax credit benefit. Companies will have to ensure that retailers and distribution chain pass on the GST cat benefit to consumer with immediate effect. No delay will be allowed. It is the company's responsibility to ensure that its entire retail chain follows its directives on .....

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hich 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. Though there is a legal provision in the GST law it .....

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