Skip to main content

Tax departments keep a close watch on prices post GST rollout


Tax departments across the country are keeping a close watch on prices following the July 1 rollout of the goods and services tax (GST). 
Makers of consumer goods and handsets, as well as some restaurant chains, have all got calls from local tax authorities seeking details of invoices before and after GST as part of the exercise. 
“In order to study prices under the GST, you are requested to send selling price of your top commodity in the relevant format,” read a notice sent to a company by local tax authorities in Tamil Nadu. 
Similar messages have been sent to companies in states such as Maharashtra, Andhra Pradesh and Puducherry. Some have even got phone calls seeking price information, said a person aware of the development. 
The government is keen to prevent any spike in inflation due to GST as happened in some countries that implemented the levy. India has opted for a two-pronged solution to make sure this doesn’t happen — a multi-rate GST structure and a proposed anti-profiteering agency. 
The GST Council has tried to ensure that items are placed in slabs that are closest to the rate at which they were taxed earlier. The levy has four tiers — 5 per cent, 12 per cent, 18 per cent and 28 per cent. 
Malaysia and Australia had put in place a mechanism to ensure prices didn’t shoot up after the indirect tax was implemented in those countries. 
When industry had expressed concern that the anti-profiteering initiative may evolve into a modern-day inspector raj, it was assured that this wouldn’t be the case. 
The government has so far maintained that the anti-profiteering provision is a deterrent and expects industry to pass on any cost reductions due to GST to consumers and not raise prices. Implicit in this was the assurance that investigations would be triggered by consumer complaints. 
The latest move by tax authorities comes as the anti-profiteering framework is yet to be operationalised. Experts said it would be an added complication as companies seek to comply with new tax regime. 
“These random enquiries by the authorities are not in line with the rules notified and lead to avoidable paperwork for companies at the time when they are trying to settle in the new tax regime,” said Pratik Jain, leader, indirect taxes, PwC. 
“GST council should take a note of this and issue appropriate guidelines.” 
The government is monitoring prices and the supply situation. More than 200 officials of the rank of joint secretary and additional secretary have been assigned four-five districts each to closely watch implementation. 
Anti-Profiteering Framework
Rules empower a five-member National Anti-Profiteering Authority to order price cuts to the extent of lower taxes, impose penalties or even cancel registrations under the GST Act, effectively stopping the entity from doing business. 
Besides that, a standing committee of nine members, consisting of state, central and GST Council officials, will examine complaints that will be passed on to the director general, safeguards, for investigation. The proposed anti-profiteering authority will take the final call on whether a company has engaged in profiteering. 
The Economic Times , New Delhi , 19th July 2017

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

New money laundering norms stump jewellery sector

New money laundering norms stump jewellery sector Dealers with turnover of Rs 2 crore and above covered; industry says threshold too low The central government has notified the money laundering rules for the gems and jewellery sector with immediate effect. Now, any entity deals in precious metals, precious stones, or other high-value goods and has a turnover of Rs 2 crore or more in a financial year will be covered under the Prevention of Money Laundering Act, 2002 (PMLA, 2002). The limit of Rs 2 crore would be calculated on the basis of the previous year’s turnover, said the notification. The directorate general of goods and service tax intelligence has been appointed under the Act. Sources said the government’s move to apply the PMLA to the jewellery sector was a fallout of income-tax raids on jewellers soon after demonetisation last November, when it was found that they sold gold and jewellery at a huge premium and accepted old currency notes as payment. The notification, issued on Augus…

Confusion over branded food GST

Confusion over branded food GST The GST Council's statement over the weekend on applying tax on branded food items has left most of the trade confused.

Even though the Council has not changed the rates on food -0 per cent on unbranded stuff and 5 per cent on brands -many small traders who didn't levy GST earlier said they could come under the 5 per cent slab after the clarification.

While they predicted some increase in consumer prices, large players said they can absorb GST in many ways and keep prices steady.

"Trade is confused and hence on behalf of our chamber, we have asked our members to go ahead and charge 5 per cent GST," said Sushil Sureka, general secretary of the Ahilya Chamber of Commerce and Industry in Indore.

The statement clarifying the application of GST came after some businesses were found deregistering their brands and selling under corporate brand name without paying tax, after the Council exempted unbranded food from the new all-encompassing indirec…