Anti-profiteering

Any reduction in rate of tax on any supply of goods or services or benefit of input tax credit shall be passed on to recipient by way of proportionate reduction in Final Price of the goods or services.

eg: 

Gujarat Pipe Dealer is selling pipes in Gujarat, he is registered under Gujarat VAT laws. He has purchased these pipes from manufacturer where on pipes Excise Duty was levied.

In existing laws, Excise duty levied by manufacturer to dealer is the cost while selling the pipes.

But under GST transitional provisions, the dealer can avail ITC benefits on those excise duty levied pipes and the reduction in such cost need to be passed on to customer.

In Rs

Purchased Pipe from manufacturer                                         1,00,000

Excise duty levied @ 12.5%                                                       12,500

Total                                                                                        1,12,500

VAT levied @ 5%                                                                         5, 625

Total Cost to Dealer                                                                1,18,125

When dealer is selling this pipes to its customer ( under existing laws)

Cost of pipe( VAT ITC will be available to him)                     1,12,500

Profit of approx. 7%                                                                  7,875

Final Cost                                                                           1,20, 375

Vat @ 5%                                                                                6,019

Final Cost to Customer                                                     1,26,394

When dealer is selling this pipes to its customer ( under GST )

Cost of pipe( VAT & Excise ITC will be available to him)   1,00,000

Profit of approx. 7%                                                              7,000

Final Cost                                                                         1,07,000

GST lets say @ 5%                                                               5,350

Final Cost to Customer                                                   1,12,350

There has been reduction in cost of pipe due to ITC.

Well Explain.....

Well Explain by Nisha.....

But one thing you should rectifiy vat will be not levied when GST applicable .....

Yes Prabir Paul is correct, it would be GST