Industry body Confederation of Indian Industry (CII) has called for a greater clarity in the anti-profiteering rules of the goods and services tax (GST) to avoid discretionary bias that could in particular create hardship for small enterprises. 

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 anti-profiteering clause was brought in the GST to ensure that businesses pass on the benefit of tax rate reduction to consumers. 

“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. It said several factors contribute to pricing decisions, such as supply and demand conditions, supplier’s cost and taxes. 

Pre-GST and post-GST profits may be influenced also by factors such as lower logistics costs and free flow of goods and services across states, elimination of certain taxes, and better efficiency, it said. “The anti-profiteering clause of GST law should provide clarity on rules and regulations regarding assessment of valuation and impact of taxes.” 

The industry body said 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,” it said in a statement. 

It also pointed to a complicated compliance. 

 

Source: Economic Times

 

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