FINMIN WARNS INDIA INC OF PROFITEERING

Srinagar, May 19: With companies indicating a possible rise in prices post the rollout of the Goods and Services Tax from July 1, the finance ministry on Friday warned India Inc against raising rates arbitrarily in anticipation of the GST.

The tax department may invoke the anti-profiteering clause after the mechanism is put in place and may look into balance sheet of firms if they have gained from the GST and whether the benefits have been passed on to consumers.

“The machinery for the anti-profiteering authority may not be ready at present but any change in prices will be called into questioned,” revenue secretary Hasmukh Adhia said, adding that any fluctuations in prices will be closely monitored.

Mr Adhia said the government will soon begin work on setting up an anti-profiteering agency, as proposed in the GST law and the tax department may even initiate suo motu action against firms. “We expect companies to cooperate. We hope we don’t have to use the weapon (of anti-profiteering authority),” he said.

The GST Act includes the provision of setting up an anti-profiteering authority to ensure that companies pass on the benefit of tax reduction to customers.

The GST Council has fitted the goods and services in tax brackets of 5, 12, 18 and 28 per cent.

He said that despite the higher standard rate of 18 per cent, service providers will get input tax credit that will lower the effective incidence of the GST to around the current incidence of 15 per cent.

■ MR ADHIA said the government will soon begin work on setting up an anti-profiteering agency, as proposed in the GST law

■ TAXMEN may invoke the anti-profiteering clause after the mechanism is put in place