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Panel of officers to decide GST profiteering scheme

NEW DELHI : If government can remove administrative bottlenecks, a panel of officials charged by the GST council with emergency decisions will issue orders on how goods and services tax (GST)-related profiteering will be regulated after the end of November said a famous person. with the discussions in government.

This is expected to allay concerns about deciding the future of the anti-profit regime under GST when a GST council meeting date has not yet been set. The Council had previously asked the Center to investigate the transfer of pending and future anti-profit cases to the antitrust regulator, the Competition Commission of India (CCI), after the National Anti-Profiteering Authority (NAA) term expires in November. .

To date, the GST Council has not previously convened a meeting. The officers panel is being considered to make urgent decisions between two GST council meetings.

However, there are administrative issues to be resolved before merging the two regulators’ investigative wings and transferring cases from NAA to CCI. One is that the regulatory architecture needs to be finalized so that the mandates of the two regulators can be carried out under the same roof, said the person who asked for anonymity.

CCI ensures that market forces can function unhindered and corrects the behavior of companies that is stifling competition so that consumers can benefit from well-functioning markets. It aims to prevent practices that hinder competition in order to promote competitiveness and ensure freedom of trade. This will help consumers have access, choices and price controls, but CCI does not engage in price regulation. However, the mandate of the NAA is to ensure that companies pass on the benefits of tax cuts and the availability of pretax credits to consumers, including dealing with pricing and production costs. The responsibilities are far apart. In addition, manpower and infrastructure requirements for CCI to take on additional mandates must be sanctioned, said a second person, who also sought anonymity.

Since CCI chairman Ashok Kumar Gupta resigned after a four-year term in office, the regulator has been faced with a lack of quorum with just two members at the helm, despite the law allowing up to six members for arbitration.

The anti-profit regime tried to prevent companies from collecting tax breaks for consumers during the transition to the GST regime in 2017, but its constitutionality has been challenged by the courts.

Companies have returned so far 510 crore reportedly benefited consumers and may have to return much larger sums to consumers, according to official estimates on the regulatory measures under the indirect tax regime, Mint reported Oct. 10.

Businesses and tax professionals argued that in the absence of industry guidance, it is very difficult to correctly estimate the magnitude of the benefit from tax cuts to be passed on to consumers. CCI will require indirect tax experts to carry out the anti-profit mandate.

The government has extended the NAA’s term of office twice before. One of the main concerns of policymakers is profit-seeking in the real estate sector. As many projects are delayed, there is concern that developers may not pass on the benefit of pre-tax reductions since the rules came into effect in 2017. Therefore, it will be important to continue the regulatory oversight beyond November, the second person said.

An email request to the Treasury Department spokesperson on Nov. 1 and Thursday for comment on the story went unanswered at the time of publication.

Since government plays little role in setting prices in a free market economy, except for those items that are subject to price control under the Essential Commodities Act, there are some restrictions to ensure that companies pass on the benefit of tax relief to consumers.

Once the price of an item including taxes has been reduced by a company, as required by a reduction in the tax rate or the availability of tax credits, there is no lock-in period for the reduced price and companies are free to change the base price of the product. raise or serve afterwards.

The government cannot question that. In addition, there is no ecosystem for sample withdrawals by authorities to check whether companies pass on tax benefits to consumers. Consumer awareness plays a major role in enforcing the anti-profit provision.

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