Were the GST Anti-Profiteering Norms an Afterthought?

Wed, 21 Jun Pre-Open

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The government is all set to roll out the Goods and Service Tax (GST) regime, from 1 July 2017. While many trader and business lobbies have asked for extensions for implementation, the government is in no mood to budge from its target date.

However, there are some concerns regarding the anti-profiteering rules which form a part of the GST regime.

In the current format, the government's anti-profiteering rules on the goods and services tax (GST) raise more questions than answers. While the intent is to curtail inflation post-GST implementation, the notification suffers from a lamentable lack of clarity on many aspects, increasing uncertainty for businesses.

To begin with, the law would be applicable to all businesses irrespective of their nature or revenue. Since businesses are already struggling to brace for the 1 July deadline, it would have been better if the rules were first made applicable to those segments where price fixing is a real problem, or in markets where implementation of GST could lead to significant inflation.

Over and above this, there is no clear timeline that has been provided for the implementation of the law. Most importantly, there is no mention whether the mechanism for implementing anti-profiteering measures will be product-based or entity based. The rules only talk about the composition of an anti-profiteering committee and that it has the power to determine the methodology and procedure.

The rules also talk about state-wise committee and investigations, which would just add to the distress of businesses.

Thus there seems to be a lot of ambiguity, in the anti-profiteering rules, which could cause problems in the long run for the GST regime.

To conclude, the poorly framed anti-profiteering rules seem to be an afterthought. If implemented without clarity, it could deal a blow to business confidence.

The Goods and Service Tax or GST bill is one of the most awaited legislations.

Undoubtedly, a single tax replacing all forms of local taxes at the state and central levels has advantages. The bill helps in removing inefficiencies one witnesses in the form of the long queues of truckers at the border between states. The basic idea is to create a single, cooperative and undivided Indian market to make the economy stronger and powerful. This structure is likely to bring in structural changes that will benefit organsied players over the long run.

To know how GST affects you, be sure to read Vivek Kaul's report on GST & You.

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