With an aim to check companies from hiking price of products before the much-anticipated Goods and Services Tax (GST) roll out, the central government is working on bringing out anti-profiteering rules, according to Indian Express report. A few days ago, the finance ministry had warned India Inc against raising rates arbitrarily in anticipation of the GST. According to IE report, it might take some time to put the machinery in place for anti-profiteering after GST rollout but the rules will be finalised by the implementation date. The rules would be approved by the GST Council, it added.
“The machinery for the anti-profiteering authority may not be ready at present but any change in prices will be called into question,” Revenue Secretary Hasmukh Adhia was quoted as saying PTI. Adhia said the government will soon begin work on setting up an anti-profiteering agency, as proposed in the GST law and the tax department may even initiate suo motu action against firms. “We expect companies to cooperate. We hope we don’t have to use the weapon (of anti-profiteering authority),” he said.
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The GST Act includes the provision of setting up an anti-profiteering authority to ensure that companies pass on the benefit of tax reduction to customers. The GST Council has fitted the goods and services in tax brackets of 5, 12, 18 and 28 per cent.
Adhia said that despite the higher standard rate of 18 per cent, service providers will get input tax credit that will lower the effective incidence of the GST to around the current incidence of 15 per cent. The tax department feels tax cut benefits should be passed on to consumers through more transparent billing.
Last month, the government had said that it hoped not to use the anti-profiteering clause much and it is meant to apply only during a short transitional period. The anti-profiteering clause is meant to be a deterrent and will be triggered only if there is a credible complaint, Adhia had said last month.
The industry, however, has raised concerns about the anti-profiteering clause in GST laws, saying that it is open to misuse and subjective interpretation as it is difficult to measure how much would amount to commensurate reduction in prices with respect to a lower tax incidence.