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GST: Council to decide on anti-profiteering mechanism at Saturday meet

FM Jaitley said it would be mandatory for manufacturers to pass on benefits to consumers

Indivjal Dhasmana  |  New Delhi 

Finance Minister Arun Jaitley
Finance Minister Arun Jaitley

The much-awaited mechanism for will be decided upon by the Council on Saturday, Finance Minister Arun told the Lok Sabha on Tuesday. He also expressed the hope that other sectors would follow suit of the auto sector to cut prices due to the effective lower rates under the (GST).

Referring to concerns raised by members with regard to impact of on prices, said it would be mandatory for manufacturers to pass on the benefits of reduction in taxes to consumers.

He hoped that the decision of price cut by automobile sector on account of benefit of would be followed by others manufacturers.

"What if input tax benefit is not transferred to consumers?...we are meeting a few days from now...In a short while, we are going to finalise the entire mechanism as far as is concerned.

"All you need is to make a few examples and then everybody will fall in line. If there is benefit of the input credit then cost correspondingly must decline," he said while replying to a discussion on Supplementary Demands for Grants which was later passed by the Lok Sabha.

The industry was resistant to this clause, he said, adding, it has been put in the law for initial few years to save the interest of consumers.

After taking into account input tax credit, weighted average tax is less than what it was on June 30, said.

It will also help in increasing the tax base and enhancing resources for the government for states as well as central government.

As many as 72 lakh businesses have migrated to Network while 13 lakh new users have also registered against 80 lakh dealers prior to GST, the finance minister said.

Citing other benefits, he said, removal of octroi has resulted in saving of both fuel and time for truckers.

impact is not only on indirect taxes but on direct taxes as well, he said.

With being put place, cannot take place, he said.

The law simply states that the businesses have to pass on the benefits arising out of lower taxes to the consumer.

According to Clause 171 of Act, it i mandatory to pass on the benefit due to reduction in rate of tax or from to the consumer by way of commensurate reduction in prices.


The government is yet to set up the body, but it has formed a search panel to select the chairman.

The rules on say that companies not passing on benefits of reduced prices on account of the proposed (GST) to customers may lose their registration.

However, this would be the last resort before other options are explored, according to one interpretation of rules. The body can order reduction in prices, ask companies to returning money to the customer along with interest, ask them to deposit money in in case the customer does not claim it or is not identifiable and imposition of penalty equivalent to the amount of profiteering.

Allaying fears over the measures, a finance ministry official had said the proposed authority will take up for scrutiny only those cases that have mass impact and those where undue profit of more than Rs 1 crore has been earned.

First Published: Wed, August 02 2017. 09:12 IST
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