What is Anti Profiteering and Its Complications
Shambhavi Sharma / 2021-05-03 11:47:23

In the GST, the National Anti-profiteering Authority (NAA) has a simple mission: to ensure that companies pass on the benefits of lower tax rates or input tax credits to customers. However, after three years on the GST path, NAA may have single-handedly contributed to a large number of lawsuits. Almost every industry, including consumer products, pharmaceuticals, real estate, restaurants, and media and entertainment, has faced massive demands.
The discrepancy in the methods used to calculate benefits is at the heart of all the controversy concerning NAA's behaviour. Regrettably, the anti-profiteering mandate's core words "rate of tax," "gain," and "commensurate reduction in prices" are not specified in GST. There is also no defined methodology or set of guidelines for determining the amount of benefits that NAA should pursue. In reality, the NAA has been granted broad authority over methodology and procedure. Instead of notifying a standard computational methodology, NAA has been arbitrarily determining the computational methodology on a case-by-case basis under the guise of such forces.
  • It clearly states that the benefits of any tax rate reduction or input tax credit benefit should be passed on to recipients by manufacturers of goods and services by corresponding price reductions.
  • Profiteering is the deliberate refusal to lower the price of a good even after a tax cut. The aim of this principle is to limit the excess benefit earned by suppliers as a result of tax reductions following the introduction of GST.
Rate of Tax Reduction
  • One of the provisions of anti-profiteering legislation is that the tax rate be reduced. If the tax rate is reduced, the savings should be passed on to the customers.
  • Restaurants, app-based taxi services, food and beverage sales in various stores, and other places will all benefit from such a reduction. Since there are invoices to keep track of such a reduction in taxes and the rates being listed by the vendors, it is quick and easy to track.
  • Issues can occur when products are inclusive of taxes and it is difficult to distinguish and recognise the tax discount provided to the commodity, resulting in a void where the supplier can benefit more by not lowering the price.
  • This is common in the textile industry, where tax distinction is not provided and the seller can easily maintain the same price after the tax reduction.
National Anti-profiteering Authority
  • Rule 126 of the Central Goods and Services Tax Rules, 2017 establishes the methodology and powers of this authority. It has a total of five members, with the chairman being one of them.
  • The chairman is someone who has held or is currently holding the position of Secretary to the Government of India.
  • The remaining four members are technical members who have held or are currently holding the role of Commissioner of State Taxes or Central Taxes, or some other equivalent position under current laws.
  • The Authority's term expires after two years from the day the Chairman takes office.
  • The task of the authority is to decide if the tax relief has been passed on to the recipient in the form of lower supply prices. In the event of non-compliance with the defined rules and regulations, the authority has the authority to penalise and cancel the registration.
The economy's changing face in recent years has resulted in significant ups and downs. It is critical to recognise that policing alone cannot solve the issues, and that as beneficial as having an advanced approach to economic development is, the execution of these policies is the most important aspect. Anti-profiteering is a critical and effective practise that has been adopted in a number of other countries.
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