Revised draft GST law proposes anti-profiteering clause

NEW DELHI: The draft goods and services tax ( GST) law made public on Saturday has proposed an anti-profiteering mechanism to ensure benefit of lower taxes is shared with consumers, and indicates no tax on securities and subsidies provided by the government as also free of cost supplies.

“These laws will be considered by the GST Council on December 2-3 and finalised,” Revenue Secretary Hasmukh Adhia said in a tweet on Saturday.

The states will now internally deliberate the revised drafts, which were finalised in a meeting of the council’s Law Sub-Committee comprising central and state officials.

If the GST council approves the revised draft in its meeting, the government may be able to present it before Parliament in the current winter session. The Government is keen to roll out the new regime from April 1, 2017.

Several concerns of the industry have been addressed in the revised draft. In the earlier law, there was no provision of credit of excise duty paid on stock lying with the distribution chain, which has been now incorporated. The proposal of considering “intangibles” as services has been removed.

Concepts of “composite supply” and “mixed supply” are introduced. In case of composite supply, wherein a supply is made comprising of multiple supplies of goods or services out of which one supply is predominant and others are naturally bundled with it, it will be treated as supply of such predominant supply.

In case of mixed supply, which involves multiple individual supplies of goods or services for a single price without any predominant supply, it will be treated as supply of goods or services which attracts the highest rate of tax. Supplies made to SEZ units will be treated as zero rated supplies.

Experts say the antiprofiteering mechanism could generate much debate. “Several concerns of the industry have been addressed in the revised draft. Provisions relating to antiprofiteering would lead to lot of debate. While this is aimed at protecting consumers, it might be difficult to implement,” said Pratik Jain, leader, indirect tax, PwC. They also point at the new regime creating an efficient credit mechanism.