Anti-profiteering...

“The absence of a prescriptive methodology to determine profiteering is making it difficult for taxpayers to determine the quantum of benefits required to be passed on, if any. In several cases, customers have been insisting on the benefits being passed on, leading to an increasing need for a standardised methodology,” said M S Mani, partner at consultancy Deloitte India.

The anti-profiteering authority has so far got 169 complaints alleging that suppliers of goods or services have not passed on GST benefits to customers. The Director General of Safeguards, the investigative arm of the Department of Revenue, has sent notices to Pyramid Infratech, Honda Motor Vehicles, Lifestyle International, and Hardcastle Restaurants (master franchisee of McDonald’s) on this ground. It has asked these companies to provide their balance sheets, trial balance, and profit-and- loss accounts for the past year.

The Confederation of Indian Industry (CII) has also pressed for clear guidelines on anti-profiteering, saying the issue could lead to hardship for smaller players. “Another challenge is complicated compliance. The government would need to compare the cost of every product before and after the GST to determine the amount of tax benefit applicable. Manufacturers or suppliers might also deal in several products that are not distinguished in their accounting books; determining the price margins for individual products will be difficult,” said the CII. "Tax authorities will need to be sensitive to natural business outcomes and avoid undue harassment. Also, the clause gives relatively less time for preparation and adoption of the new provisions."

The anti-profiteering mechanism is a three-stage process. There is a state-level screening committee for local complaints and a standing committee for national-level complaints; then, investigation by the Directorate General of Safeguards, and then a probe by the decision-making body, the National AntiProfiteering Authority.

Meanwhile, the government is looking at simplifying the anti-profiteering application complaint form to facilitate complaints from citizens.

Bipin Sapra of consultancy EY said: “While the simplification of the complaint form would make it easy to file complaints, it is important for the government to do preliminary verification before initiating an inquiry.”