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The GST has made a revolutionary in the indirect tax system of the country and the second chapter of it was added on 15th November. GST council revised the GST rates on 15th November as well which expects that the companies will reduce the prices on some of the commodities so that the consumers get benefitted out of it. To give a relief to the consumers and businesses, the tax rates on 200 items such as shampoo, detergent, chocolates, beauty products etc were reduced. According to the companies, they are very soon going to pass the benefits to the consumers as the tax rates on some of the products were decreased from 28% to 18%.

The main sector which is getting benefitted out of the reduction of GST rate is the FMCG sector. So, the companies decided that after decreasing the prices of the commodities, they will let the consumers aware of the decrease in prices by their ads. They have a close eye on the distributors and channel partners to check whether the customers are really getting benefitted or not or there has been some kind of black marketing.

The Finance Ministry has also urged the companies to pass the benefits to the consumers as soon as possible. Unfortunately, the benefit of tax reduction not passed to ultimate customers as of now.

Recently, GST rates on restaurant substantially reduced from 18% to 5%, however, restaurants had failed to pass on the benefit to customers by increasing pre-tax base price and keeping the final bill amount unchanged.


Invoice (when tax rate on restaurants is 18%)

Tea: 84.75
GST: @18% 15.25
Total Amount: 100

Invoice (when tax rate on restaurants is 5%)

Tea: 95.24
GST: @5% 4.76
Total Amount: 100

To counter this situation, the Government has added anti-profiteering measures which will check whether the consumers are getting ultimate benefit of the reduced GST rates or the companies are keeping the profits in their pockets.

Anti profiteering measures will keep a check on the prices and will put a legal obligation on the businesses to pass the benefit to the consumers.

The government has also given rights to Anti Profiteering Authority which can put a penalty on the companies if it finds that the companies are not passing on the benefits to the consumers.

To understand the Anti-Profiteering measures, let first understand what is profiteering?

Profiteering means increasing the business profit illegally by not passing the benefit of input tax credit or reduction of tax rates or any tax incidence relaxation announced by Government.

The 'anti-profiteering' measures enshrined in the GST law provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on the supply of goods or services flow to the ultimate consumers.

On activation of Anti Profiteering Authority, we are hoping businesses will pass on the tax reduction benefits to the ultimate customers.

In case you need assistance with Anti-Profiteering measures you can fill out our inquiry form and arrange a call from E-Startupindia business advisors.


Published by

Ravi Kumar
Category GST   Report

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