The Centre has cautioned traders that failing to pass on the benefits of GST 2.0 rate cuts to customers could invite penalties and punishment under the Weights and Measures Act.
Earlier this month, the government unveiled GST 2.0 as a "Diwali gift" aimed at lowering prices for consumers. However, authorities have noted that some traders may try to retain the benefits of reduced tax rates instead of passing them on to customers.
Anti-Profiteering Provisions in Focus
While anti-profiteering provisions under Section 171 of the GST Act have been inactive since April 1, 2025, the Centre retains the power to reactivate them anytime through a simple notification. If profiteering is detected, GST officials can conduct full audits and verification of traders' accounts and documents.
The government has made it clear that profiteering under the guise of GST cuts will not be tolerated, and strict action will follow against offenders.
Price Calculation Explained
The Centre also clarified misconceptions around price reduction. For instance:
- An item costing Rs 100 at 12% GST has a base price of Rs 89.29 and tax of Rs 10.71.
- If moved to the 5% GST slab, the new price becomes Rs 93.75, a reduction of Rs 6.25, not a full 7%.
- Similarly, if shifted from 12% to the 18% GST slab, the price increase is Rs 5.39, not 6%.
Government's Stand
The government stressed that GST 2.0 reforms are meant to directly benefit consumers. Any trader withholding these benefits risks facing audits, penalties, and revival of anti-profiteering provisions.
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