What is Anti profiteering in GST?
GST anti-profiteering is a law, that came into existence under the GST system to track the business that makes the profit, out of input put tax credit and reduction of tax after GST rollout without passing the benefit to the customers.
PRE GST V/S POST GST
Suppliers were not allowed to take the input tax credit on many things and that was resulting in direct expense to the businesses prior to GST. Since the GST rolled out on 01st July 2017, the government has allowed businesses to take credit on almost everything which is resulting in furtherance of business.
As a result, the government wants the industries to reduce the price of their final product. Price Reduction has to be done as a benefit gained from this additional tax credit or reduction in overall tax rate after GST rollout. In case the supplier does not follow this practice, GST Anti-profiteering measures committee May order :
(a) Reduction in prices;
(b) Return of the amount not passed on with interest @18% to the recipient;
(c) Imposition of penalty; and
(d) cancellation of registration of the supplier.
Therefore the committee constituted under GST law will 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. The government wants to ensure all consumers enjoy the benefit of lower prices of goods and services under GST. Therefore steps like GST Anti-profiteering measures are taken by the government.
The government may soon become more aggressive with GST Anti-profiteering measures rules in the coming months. Because this may trigger inflation like in other countries where GST was introduced in the past, mainly Australia and Malaysia. Inflation increased drastically after two years of its introduction in these countries.
If the same thing happens in India, then this will have negative effects on the economy and political fallouts. Therefore the government has already started acting on GST Anti-profiteering measures to protect consumer rights.
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