HOW THE PROVISIONS WORK

Under GST, the suppliers of goods and services mustpass on any reduction in rate of tax or the benefit of input tax credit to consumers by way of commensurate reduction in prices. If this is not done, the consumer's interest is protected bythe National Anti-profiteering Authority, which may order:

Reduction in prices Return of the amount not passed on, with 18% interest to the recipient

Imposition of penalty Cancellation of registration of the supplier Affected consumers may file an application, in a prescribed format, before the Standing Committee on anti-profiteering if the profiteering has all-India character or before the State Screening Committees if the profiteering is of local nature

Issues & challenges The anti-profiteering rules contain the bare essentials of a statute for determination of alleged anti-profiteering by the anti-profiteering authority

No methodology or procedure prescribed in either the CGST Act or the rules to determine

profiteering by the supplier

Left at the discretion of the authority

Lack of clarity over whether the computations and calculations would be made state-wise, location-wise, product-wise or at entity-level

How others have tackled the issue AUSTRALIA Follows the net dollar margin rule method i.e. if taxes and costs fell $1, then prices should also drop by at least $1

MALAYSIA Has recently shifted from the net profit margin method to the mark-up per cent or margin per cent method