The Union Cabinet on Thursday approved the setting up of a National Anti-Profiteering Authority, a body with an overarching mandate to ensure that the reduction in tax rates under the new Goods and Services Tax (GST) regime gets passed on to consumers by way of lower prices.
Mr Prasad said, the constitution of NAA will bolster the confidence of consumer as they reap the benefits of recent reduction in GST rates.
The government said the Cabinet decision was “following up immediately on yesterday’s (November 15) sharp reduction in the GST rates of a large number of items of mass consumption”.
The authority is mandated to ensure that the benefits of GST rate cuts are passed on to the ultimate consumers by way of a reduction in prices, Capital Market reported.
GST Council, chaired by finance minister Arun Jaitley and comprising state FMs, had last week chose to slash tax rates of over 200 items in the GST regime as well as lowered tax rates on AC and non-AC restaurants to 5%.
The GST Council, at its 23rd meeting in Guwahati last week announced major GST rate cuts by shifting 177 items-ranging from shaving creams to wristwatches-from the highest slab of 28% to the 18% slab.
The NAA will have a sunset date of two years from the date on which the chairman assumes charge. The chairman and the four members have to be less than 62 years, as per the anti-profiteering rules notified earlier. Only 50 items now attract tax rate of 28 per cent.
The government is keen to ensure that the benefit of lower rates is passed on to the end consumer, but companies face implementing challenges and operational issues in doing so, said Abhishek Jain, a partner at EY India.
However, in case the incident of profiteering relates to an item of mass impact with “All India” ramification, the application may be directly made to the Standing Committee.
If the standing committee is able to conclude that there is an element of profiteering, then the matter will be referred for detailed investigation to DG Safeguards, which shall report its findings to the NAA. If the authority finds that a company has not passed on GST benefits, it will either direct the entity to pass on the benefits to consumers or, if the beneficiary can not be identified, ask the company to transfer the amount to the “consumer welfare fund” within a specified time.