GST anti-profiteering body in place to ensure firms don't take you for a ride
ET Online|
Nov 16, 2017, 04.14 PM IST
When the government slashed GST (Goods and Services Tax) rate on restaurants and eateries to 5 per cent from 18 per cent, people hoped the bills would come down. But at many restaurants they did not. Why? These restaurants did not pass on the rate cut to customers. Some customers even put up 'before' and 'after' bills from McDonald's on social media to prove this point.
McDonald's reply
But now it has become difficult for businesses to not pass on the GST rate cuts to customers. The cabinet today approved setting up a National Anti-profiteering Authority (NAA) under GST.
This authority will ensure that benefits of reduction in GST rates are passed on to end consumer through reduced prices. It will have screening committees in all the states whom consumers can approach if they find they are not getting the benefit of reduced rates.
The issues with ramifications for the whole country can be taken to a standing committee which can refer the case to Director General of Safeguards at CBEC which will report its findings to the NAA. If NAA finds an element of profiteering, it can ask the producer or the business to reduce the price or return the undue benefit to the consumer along with interest.
If the benefit cannot be returned to the consumer, it will have to deposited in a consumer welfare fund. In extreme cases, NAA can even impose a penalty on the business or even cancel its GST registration.
The government’s reference point for arriving at the anti-profiteering rules is two countries, Australia and Malaysia. The anti-profiteering methodology prescribed by Malaysia focused on product-wise pre- and post-GST net profits of companies. The Australian method focussed on pre-GST and post-GST price changes among other things.
McDonald's reply
The Government has brought down GST from 18% to 5%, but there has been a removal of Input Tax Credit.[1/3]
— McDonald's India (@mcdonaldsindia) November 15, 2017
we have structured the changes in such a manner that total amount paid by the customer remains the same. [3/3]
— McDonald's India (@mcdonaldsindia) November 15, 2017
But now it has become difficult for businesses to not pass on the GST rate cuts to customers. The cabinet today approved setting up a National Anti-profiteering Authority (NAA) under GST.
This authority will ensure that benefits of reduction in GST rates are passed on to end consumer through reduced prices. It will have screening committees in all the states whom consumers can approach if they find they are not getting the benefit of reduced rates.
The issues with ramifications for the whole country can be taken to a standing committee which can refer the case to Director General of Safeguards at CBEC which will report its findings to the NAA. If NAA finds an element of profiteering, it can ask the producer or the business to reduce the price or return the undue benefit to the consumer along with interest.
If the benefit cannot be returned to the consumer, it will have to deposited in a consumer welfare fund. In extreme cases, NAA can even impose a penalty on the business or even cancel its GST registration.
The government’s reference point for arriving at the anti-profiteering rules is two countries, Australia and Malaysia. The anti-profiteering methodology prescribed by Malaysia focused on product-wise pre- and post-GST net profits of companies. The Australian method focussed on pre-GST and post-GST price changes among other things.
