Govt likely to revive anti-profiteering rules under GST 2.0 overhaul

Anti-profiteering provisions were first introduced in 2017, when GST replaced multiple indirect taxes and several items had lower tax incidence

Govt likely to revive anti-profiteering provisions under GST 2.0 — The GSTAT Principal Bench, with all-India jurisdiction, hears matters relating to place of supply and anti-profiteering

3 min read Last Updated : Aug 20 2025 | 8:13 AM IST

The government is considering re-invoking anti-profiteering provisions for a limited period to ensure that businesses pass on indirect tax benefits to consumers, following the proposed overhaul of the goods and services tax (GST) regime, according to a senior official.

“While the Centre remains committed to market-driven pricing, concerns over unfair profiteering cannot be ruled out if companies fail to reduce maximum retail prices (MRPs) in line with lower tax rates. We are planning to invoke anti-profiteering measures for up to two years so that businesses don’t pocket benefits of the lower rates,” the official said, requesting anonymity. An email sent to the finance ministry remained unanswered until the time of going to press.

Anti-profiteering provisions were first introduced in 2017, when GST replaced multiple indirect taxes and several items came under lower tax incidence. Brought in under Section 171 of the Central GST Act, the rules were designed to ensure businesses passed on the benefits of tax rate reductions and input tax credit (ITC) through corresponding price cuts. Over time, the scope widened beyond MRPs to cover successive rate reductions and ITC benefits across sectors including FMCG, hospitality and real estate.

To oversee enforcement, the government set up the Directorate General of Anti-Profiteering (DGAP) to investigate complaints and established the National Anti-Profiteering Authority (NAA) to regulate unfair profiteering activities.

Following the dissolution of the NAA in December 2022, the Competition Commission of India briefly handled anti-profiteering cases. In October 2024, jurisdiction shifted to the GST Appellate Tribunal (GSTAT) Principal Bench in Delhi, with the government notifying April 1, 2025, as the sunset date after which consumers could not file fresh complaints, though existing cases would continue to be adjudicated.

The GSTAT Principal Bench, with all-India jurisdiction, hears matters relating to place of supply and anti-profiteering. It recently upheld a finding against a Subway franchise, M/s Urban Essence, ruling that it had profiteered by not passing on the GST rate cut on restaurant services.

“At present, only market forces are expected to drive prices lower. Against the backdrop of upcoming GST 2.0 reforms, it is imperative for the government to consider re-introducing appropriate mechanisms to pass on the benefit to the end consumer,” said Shivam Mehta, executive partner at Lakshmikumaran & Sridharan.

Harpreet Singh, partner at Deloitte, said that for anti-profiteering rules to be credible under GST 2.0, the government must develop a transparent, sector-specific and standardised methodology. “This would not only ensure fair enforcement but also reduce litigation and enhance trust among businesses and consumers,” he said.

Abhishek A Rastogi, founder of Rastogi Chambers, added that adopting digital tools for real-time data capture and comparative analysis would allow authorities to track whether businesses are genuinely transferring the benefit of reduced tax incidence. “At the same time, the regime must avoid overreach and provide clear guidelines, so that industry can comply without fear of arbitrary action. The balance lies in creating a deterrent against unfair profiteering, while maintaining business certainty,” he said.