Skip to main content

Complications in GST anti profiteering rules

Complications in GST anti profiteering rules
The official form for making complaints under the antiprofiteering mechanism in the goods and services tax (GST) regime defeats the purpose —to help consumers get the full benefit of tax cuts and input tax credits.The form, APAF1, requires a consumer to file in detail the cost structure of the company against which a complaint is made for profiteering
Also, details on sale price, taxes, both preGST and postGST, benefits of input tax credits, etc.Rajeev Dimri, partner with consultancy Deloitte India, asked how consumers could be expected to know all these details, particularly of cost structures, when even many insiders in such a company wouldn´t be aware of these
Abhishek Jain, tax partner with EY India, said it also appeared that a separate application might be needed for each good or service in reference to which antiprofiteering is alleged.Pratik Jain of consultancy PwC India agreed the level of information asked for in the antiprofiteering form seemed too detailed for a common citizen
"It might be more realistic for consumers to reach out to the GST commissioners, who could make enquiries and get the relevant information and then file a profiteering complaint on behalf of consumers.The government might want to consider a simpler form for consumers," he added.Another expert said the government probably wanted to avoid frivolous complaints and hence such a tedious mechanism.
The government is also yet to issue guidelines on what constitutes profiteering.It recently set upa National AntiProfiteering Authority, amid reports that some companies, particularly restaurants, were not passing on the benefit of GST rate cuts to consumers.BN Sharma, additional secretary in the department of revenue, is chairman of the Authority.In its latest meeting in November, the GST Council had cut rates onalittle over 200 items.
As many as 176 items saw a cut from 28 per cent to 18 per cent.This leaves only 50 items which attract the highest GST rate of 28 per cent.Also, the tax rate on restaurants, barring those in starhotels, was cut to five per cent from 18 per cent, although their input tax credit was removed
In addition to the Authority, the institutional mechanism for effective implementation of the antiprofiteering measures enshrined in the GST rules consists of a standing committee, state level screening committees and the Directorate General of Safeguards in the Central Board of Excise &Customs (CBEC).
Consumers who say there has been no commensurate reduction in prices may apply for relief to the screening committee in the state concerned.After forming a prima facie view on the substance of the application, the matter would be referred to the standing committee at the Centre
The latter will, in turn, ask the Director General of Safeguards for a detailed investigation, the findings to go to the Authority.The screening committee is expected to look into complaints of local nature; the standing committee would ordinarily enquire into cases of mass impact, with all India ramifications
Most complaints so far on profiteering with screening committees and the standing committee relate to restaurants and the real estate sector.Once the Authority confirms there is a justification to apply antiprofiteering measures, it has the power to order the business concerned to reduce its prices or return the undue benefit availed of, with interest atarate of 18 per cent, to the consumers of the goods or services.
If the undue benefit cannot be passed on to consumers, it can be ordered to be deposited in the Consumer Welfare Fund.The Authority also has the power to impose a penalty on the defaulting business or even cancellation of its GST registration
The form, APAF1, requires consumers to file in detail the cost structure of firms against which a complaint is made for profiteering Details on sale price, taxes, both preGST and postGST,benefits of input tax credits, among others, also have to be produced.Govt is yet to issue guidelines on what constitutes profiteering  Most complaints on profiteering relate to restaurants, real estate sector
The Business Standard, New Delhi, 8th November 2017


Popular posts from this blog

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …

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…

Differential Tax Levy under GST: Food Firms May De-Register Trademarks

Differential Tax Levy under GST:Food Firms May De-Register Trademarks The government’s decision to charge an enhanced tax rate on trademark food brands is leading several rice, wheat and cereal manufacturers to consider de-registering their product trademarks. Irked by the June 28 central government notification fixing a 5 per cent goods and services tax (GST) rate on food items packaged in unit containers and bearing registered brand names, the industry has made several representations to the government to reconsider the differential tax levy, which these players say is creating an unlevel playing field within these highly-competitive and low-margin industries. Sources say that the move has affected the packaged rice industry the hardest and allowed the un-registered market leaders, India Gate and Daawat, to gain advantage as compared to other registered brands such as Kohinoor and Lal Qilla. Smaller players are even more worried with this enhanced rate of tax (against the otherwise …