The government is likely to revive an anti-profiteering framework alongside the upcoming GST rate rationalisation, ensuring that businesses pass on tax benefits to consumers without delay, people familiar with the matter said.
The GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet in New Delhi on September 3-4 to deliberate on a landmark proposal to reduce the current four GST slabs to just two. If approved, the restructuring could make a wide range of everyday items significantly cheaper ahead of the festive season.
According to officials, 99% of items taxed at 12% may move to the 5% bracket, while 90% of goods under the 28% slab could shift to 18%. The sweeping changes are designed to provide tax relief to consumers, but experts warn that without oversight, many businesses may choose to pocket the benefits instead of reducing prices.
"The primary aim of rationalisation is consumer relief," a tax expert noted. "To achieve that, the impact of GST rate cuts must immediately reflect in the prices of goods and services."
Legal Backing for Anti-Profiteering
Section 171 of the CGST Act, 2017 already empowers the government, based on the GST Council's recommendations, to authorise an authority to monitor whether businesses are passing on the benefits of reduced tax rates. While the National Anti-Profiteering Authority (NAA) ceased operations in November 2022, officials stressed that the law provides sufficient legal backing to enforce compliance even without its reconstitution.
The NAA, set up in 2017, passed 380 orders during its tenure, detecting profiteering worth Rs 2,563 crore. After its closure, responsibilities were shifted to the Competition Commission of India (CCI), but the latter expressed limitations in handling such cases. The 53rd GST Council meeting in June 2024 recommended transferring the function to the GST Appellate Tribunal from October 1, 2024, with new applications no longer accepted by the CCI after April 1, 2025.
Festive Season Push
Prime Minister Narendra Modi had, in his Independence Day address, promised consumers "next-generation GST reforms" as a festive gift. Analysts suggest that lower GST rates could boost demand and consumption, potentially offsetting some losses from weak exports.
Government insiders hinted that interim arrangements could be made to check profiteering before the tribunal mechanism takes over. "It is not necessary to wait for the reconstitution of NAA. The law already has provisions to act against suppliers who fail to pass on rate cuts," one official said.
The proposed changes, if approved, would mark the most consumer-focused intervention since GST's launch in 2017, with the government determined to ensure that Diwali discounts come directly from tax relief, not just retailers' marketing campaigns.
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