GST 2.0 and Anti-Profiteering Measures
The government is considering reactivating anti-profiteering regulations for two years during the transition to GST 2.0. This aims to ensure businesses pass tax cuts to consumers instead of absorbing the benefits.
National Anti-Profiteering Authority (NAA)
- The NAA was established under Section 171 of the Central GST Act when GST was introduced in July 2017.
- It aimed to prevent companies from retaining gains from GST rationalization, focusing initially on maximum retail prices and later expanding across sectors like FMCG and real estate.
Reason for Dissolution
- In December 2022, the NAA was dissolved, and its functions were transferred to the Competition Commission of India (CCI) to enhance administrative efficiency.
- However, CCI faced challenges due to its primary focus on market practices rather than tax compliance, leading to inefficiencies in handling profiteering disputes.
Current Oversight and Challenges
- From October 2024, the GST Appellate Tribunal (GSTAT) in Delhi oversees these cases.
- A sunset clause allows new complaints until April 1, 2025, while existing cases remain active.
Proposed GST Slabs
- Standard Rate (5%): Essentials and daily-use goods
- Merit Rate (18%): Most other goods and services
- 40% rate: Sin and luxury goods, replacing the 28% slab
Need for a Dedicated System
- As GST slabs overhaul, ensuring direct consumer benefits becomes crucial. Competitive pressure alone may not lower prices effectively.
- The backlog of cases suggests the necessity of a dedicated body to enforce compliance and handle profiteering as a tax issue.
Future Directions
- The GSTAT continues to address ongoing cases, balancing deterrence against profiteering with minimal regulatory burdens on businesses.
