GST Anti-profiteering Authority

Days after announcing GST rate cut for 231 items, the union cabinet approved the establishment of the much-anticipated National Anti-profiteering Authority (NAA) to ensure the benefits of such rate cuts are passed on to consumers.

Anti-profiteering measures will provide an institutional framework to ensure that the full benefits of input tax credits and reduced GST rates on goods or services flow to consumers. This institutional framework comprises the National Anti-profiteering Authority, a Standing Committee, a Screening Committee in every state and the Directorate General of Safeguards under the Central Board of Excise and Customs (CBEC).

The GST anti-profiteering authority will be headed by a senior official of the level of secretary to the central government with four technical members from the centre and the states.

The anti-profiteering authority will have a sunset date of two years from the date on which the chairman assumes charge. The chairman and the four members of the authority have to be less than 62 years of age.

Consumers who feel the benefit of a commensurate reduction in prices is not being passed on when they buy any goods or services may apply for relief to the state-level screening committee. In case an incident of profiteering relates to an item of mass impact with all-India ramifications, the application may be directly made to the standing committee.

After forming a prima facie view that there is an element of profiteering, the standing committee shall refer the matter for a detailed investigation to the Director General of Safeguards, CBEC, which will report its findings to the National Anti-profiteering Authority.

In turn, if the NAA confirms a necessity to apply anti-profiteering measures, it will step in and ask businesses that have not passed on the full benefits of a reduced tax burden to consumers to refund it with interest. If the undue benefit derived by a business cannot be returned to the recipient, it can be ordered to be deposited in the Consumer Welfare Fund. In rare cases, a profiteering business could lose its GST registration too.

The GST Council, at its 23rd meeting in Guwahati last week announced major GST rate cuts by shifting 177 items—ranging from shaving creams to wristwatches—from the highest slab of 28% to the 18% slab. It also decided to lower the GST rate on 54 other items, from diabetic food and refined sugar to bamboo furniture.

The top GST rate of 28% is now restricted to luxury and demerit goods like pan masala, aerated water and beverages, cigars and cigarettes, tobacco products, cement, paints, perfumes, air-conditioners, dishwashing machines, washing machines, refrigerators, vacuum cleaners, cars and two-wheelers, and aircraft and yachts.

The government is keen to ensure that the benefit of lower rates is passed on to the end consumer, but companies face implementing challenges and operational issues in doing so, said Abhishek Jain, a partner at EY India. Companies would expect the GST Council to issue detailed guidelines soon, he added.

In another decision, the cabinet approved a continuation of the centrally sponsored scheme for development of infrastructure facilities for the judiciary beyond the 12th Five Year Plan (April 2017 to March 2020) to be implemented in a mission mode through the National Mission for Justice Delivery and Legal Reforms, with an estimated outlay of Rs3,320 crore.

The scheme will increase the availability of court halls and residential accommodations for judges/judicial officers of the district and subordinate courts across India.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) allowed the removal of the prohibition on the export of all types of pulses to ensure that “farmers have greater choice in marketing their produce and in getting better remuneration for their produce”.

In the 2016-17 production year, Indian farmers produced a record 23 million tonnes of pulses. The government has procured 2 million tonnes of pulses by ensuring minimum support price or market rates, whichever is higher, directly from the farmers and this has been the highest ever procurement of pulses.

The CCEA also approved the continuation of “Anganwadi Services, Scheme for Adolescent Girls, Child Protection Services and National Crèche Scheme” (April 2017 to November 2018) with an outlay of over Rs41,000 crore. These are the sub-schemes under the government’s umbrella scheme Integrated Child Development Services.

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