Practical implementation of the regulations without ambiguity and untoward scrutiny is required, particularly in the initial days of implementation till the system stabilises, the CII said in a statement.
"The rules say benefit of input tax credit should have been passed on to the recipient by way of commensurate reduction in prices. However, as this definition is not clear, discretionary bias may creep in," CII said.
The clause could lead to hardship for small enterprises, in particular, the CII said, adding practical and procedural challenges may arise during the initial implementation period of the anti-profiteering clause.
"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 CII said.
The GST was rolled out from July 1 and the government had constituted the National Anti-Profiteering Authority in November.