Anti-Profiteering Provisions under GST:A Move Towards Ensuring Consumer Welfare

Abstract

One of the intended benefits of GST is to ensure reduced prices to consumers by eliminating tax cascading and ensuring availability of tax credit at various stages of production. However, this benefit may not be achieved if the suppliers do not pass on the benefits to the consumers and indulge in illegal profiteering. Therefore, the government has introduced anti-profiteering provisions in GST laws wherein suppliers of goods and services must pass on any reduction in the rate of tax or the benefit of input tax credit to consumers by way of commensurate reduction in prices. If this is not done, the consumer’s interest is protected by the National Anti-profiteering Authority. While it is difficult to reach a definitive conclusion on what implies ‘commensurate’ in a complex production system with multiple stages, these provisions are likely to be a step forward in ensuring consumer welfare.