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Clarity Required in GST Anti-Profiteering Rules: CII

Capital Market 

With the National Anti-Authority being established, the (CII) has called for greater clarity in rules to curb price increase arising from Practical implementation of the regulations without ambiguity and without untoward scrutiny is required, particularly in the initial days of implementation till the system stabilizes.

The anti-clause was necessitated to keep a check on unethical high profits, analyze long term effects of rollout, control price rise and retain consumer in the new regime. The rules say, benefit of input 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, pointed out CII.

According to CII, several factors contribute to pricing decisions, such as supply and demand conditions, supplier's cost and taxes. Pre-and post-profits may be influenced also factors such as lower logistics costs and free flow of goods and services across states, elimination of certain taxes, and better efficiency. The anti-clause of law should provide clarity on rules and regulations regarding assessment of valuation and impact of taxes.

The anti-clause could lead to hardship for small enterprises in particular, note CII.

There is concern that practical and procedural challenges may be faced during the initial implementation period of the anti-clause.

authorities will need to be sensitive to natural outcomes and avoid undue harassment. Also, the clause gives relatively less time for preparation and adoption of the new provisions.

Another challenge is complicated compliance. Government would need to compare cost of every product pre-and post-to determine the amount of benefit applicable. Manufacturers or suppliers may also deal in several products that are not distinguished in their accounting books, so that determining price margins for will be difficult.

While the objective of the anti-rules is logical and industry is willing to comply, implementation is challenging. Effective anti-provisions that are clear are needed to ensure provides benefits to consumers, stressed CII.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, January 08 2018. 14:43 IST
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