GST rate cut: Anti-profiteering body gets cabinet nod to ensure consumers get benefits
NEW DELHI : After reduced goods and services tax (GST) rates on more than 200 items the union Cabinet on Thursday approved the establishment of a powerful national body to ensure that benefits of such tariff cuts are passed on to consumers.
The Union Cabinet approved setting up of a National Anti-profiteering Authority under the GST, seeking to ensure consumers get the benefit of reduced prices under the new indirect tax regime.
The National Anti-Profiteering Authority (NAA), the body will provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to consumers.
This institutional framework comprises the NAA, a Standing Committee, Screening Committees in every state and the Directorate General of Safeguards in the Central Board of Excise & Customs (CBEC). Although consumer-friendly, some experts have pointed to the fact that this body could mean more government, not less, and that it could result in the harassment of businesses in some cases. Still, the anti-profiteering body is a temporary one, part of the transitory phase as India moves to a unified tax regime.
The body will have a life of two years.Union Minister Ravi Shankar Prasad said currently there were only 50 items that attracted the highest tax of 28% under the Goods and Services Tax (GST) regime and rates on many items have been cut to 5% as well.
“The National Anti-Profiteering Authority is an assurance to consumers of India. If any consumer feels that the benefit of tax rate cut is not being passed on, then he can complaint to the authority,” Mr. Prasad told reporters after the Cabinet meeting.This reflects government’s full commitment to take all possible steps to ensure benefits of implementation of GST to the common man, the minister added.
The approval by the Cabinet paves the way for immediate establishment of the apex body, which is mandated to ensure that the benefits of GST rate reduction is passed on to consumers. The GST Council, chaired by Union Finance Minister Arun Jaitley and comprising state counterparts, had last week decided to slash tax rates of over 200 items in the GST regime as well as lowered tax rates on AC and non-AC restaurants to 5 per cent.
The Council had earlier approved setting up of a five-member National Anti-Profiteering Authority to enable consumers to file complaint in case price reduction was not passed on. A five-member committee, headed by Cabinet Secretary P.K. Sinha, comprising Revenue Secretary Hasmukh Adhia, CBEC Chairman Vanaja Sarna and chief secretaries from two states, has been entrusted to finalise the chairman and members of the authority.
The authority will have a sunset date of two years from the date on which the chairman assumes charge. The chairman and the four members of the authority have to be less than 62 years. As per the structure of the anti-profiteering mechanism in the GST regime, complaints of local nature will be first sent to the state-level ‘screening committee’, while those of national level will be marked for the ‘Standing Committee’
If the complaints have merit, the respective committees would refer the cases for further investigation to the Directorate General of Safeguards (DGS). The DG Safeguards would generally take about three months to complete the investigation and send the report to the anti-profiteering authority.
If the authority finds that a company has not passed on GST benefits, it will direct the entity to pass on the benefits to consumers. If the beneficiary cannot be identified, it will ask the company to transfer the amount to the ’consumer welfare fund’ within a specified timeline. The authority will have the power to cancel registration of any entity or business if it fails to pass on to consumers the benefit of lower taxes under the GST regime, but that might be the final step.
According to the anti-profiteering rules, the authority will suggest return of the undue profit earned from not passing on the reduction in incidence of tax to consumers along with an 18% interest, as also impose penalty.
If the NAA confirms there is a necessity to apply anti-profiteering measures, it will step in and ask businesses that have not passed on full benefits of a reduced tax burden to consumers to refund it with interest. If the undue benefit cannot be passed on to the recipient, it can be ordered to be deposited in the Consumer Welfare Fund. In rare cases, a profiteering business could lose its GST registration too.
The NAA will be headed by a senior officer of the level of secretary to the central government with four technical members from the centre and states. A selection panel led by cabinet secretary P.K. Sinha has already started consultation with states to finalise the members of the panel.
