How will anti-profiteering help me when GST kicks in? Here's the lowdown

India is set to roll out goods and services tax from June 30 midnight, which will replace multiple state and central taxes with a single levy. The new tax is expected to bring down prices of goods as it will remove tax-on-tax as also allow seamless tax credit on inputs. Keen to ensure that this benefit is passed on to consumers in the form of lower prices, the new framework provides for an anti-profiteering provision, which benefits the common man but has irked the industry. ET takes a look at the provision:

What is the anti-profiteering provision?
The GST Act provides an enabling provision to empower the Central Government to constitute, or appoint, an authority to monitor prices businesses charge for goods and services in the lead up to, and following the introduction of, the GST. This is primarily to ensure that industry passes on the benefit to consumers and not pocket the gains themselves.

Are there global examples?
Australia and Malaysia recently implemented GST laws that provide for anti-profiteering measures. India consulted both the countries on their experience and structure.

How will the anti-profiteering provision work?
A three-tier structure has been set up to implement this. The GST Council has set up a standing committee that will receive complaints from consumers. It will, after examining the application, forward it to director general safeguards that will conduct an investigation into the allegation. It would pass on the findings to an independent Anti-profiteering authority to give a final ruling. The authority is empowered to impose penalty, ask for return of extra amount charged and also cancel licences. This authority would exist for two years only.

Why is industry apprehensive about the provision?
Industry fears that this would lead to inspector raj. Any price increase for other reasons such as higher input prices could also be investigated. There are some safeguards though built in to address the issue. The authority cannot take action suo moto. Besides, all complaints have to be backed by proper documents to show that tax benefit has not been passed.