Context

India has extended the anti-profiteering framework under the goods and services tax (GST) by another two years while also making the rules more stringent to ensure companies pass on the benefit of lower taxes to consumers.

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• The Goods and Services Tax Council, led by finance minister introduced more stringent norms to check tax evasion and extended the tenure of the National Anti-Profiteering Authority (NAA) by two years to November 2021.
• As part of its anti-tax evasion measures, businesses and merchants found guilty of pocketing the benefits of tax cuts meant for consumers and do not return the amount amassed illegally within 30 days, they will have to pay a 10% penalty of the profiteered amount. They have to return the entire amount to the consumer or deposit the money in the consumers’ welfare funds. Earlier, businesses had to pay a flat rate of Rs.25, 000 as penalty.
• Need for Clarity: As per the experts said the anti-profiteering framework needs clarity. Industry demand for clarity on methodology for anti-profiteering has still not been addressed by the government.  While the extension of term of National Anti-profiteering Authority (NAA) by two years was expected, there is need for guidelines.
• The anti-profiteering system was meant to shield consumers against any sudden spike in prices after GST was rolled out in July 2017 and to ensure that companies passed on savings from lower taxes to buyers. Several countries that implemented GST had faced a spike in inflation soon after doing so. India had looked at the mechanisms that Malaysia and Australia had put in place as part of their GST framework.

Other Decisions of the 35th GST Council meeting

• The federal indirect tax body also decided that Aadhaar-based GST identification will now be sufficient for GST registration. Aadhaar-based registration will not only simplify the process but also improve ease of doing business, as the entities will not be required to submit any other document to enroll.
• Despite demands of tax cuts from the industry, the Council focused on anti-evasion measures and simplification of rules. Proposals to slash tax rates on electric vehicles, battery chargers and leasing of electric vehicles were referred to the fitment committee for consideration. On taxation of lotteries, the Council decided to seek the attorney general’s view.
• The council also decided to introduce e-invoicing in a phased manner for business-to-business (B2B) transactions. E-invoicing would help tax authorities in combating the menace of tax evasion.
• Phase 1 is proposed to be voluntary and will be rolled out in January 2020. Registered multiplexes will be required to issue tax invoices electronically. E-tickets issued by them shall be deemed to be tax invoices.
• The council also decided on the location of state and area benches for the Goods and Services Tax Appellate Tribunal (GSTAT) for various states and Union Territories that have legislatures.
• It has been decided to have a common state bench for Sikkim, Nagaland, Manipur and Arunachal Pradesh.

National Anti-Profiteering Authority (NAA) NAA has been constituted under Section 171 of the Central Goods and Services Tax Act, 2017 to ensure that the reduction in rate of tax or the benefit of input tax credit is passed on to the recipient by way of commensurate reduction in prices. Further, the following steps have been taken by the NAA to ensure that customers get the full benefit of tax cuts: Holding regular meetings with the Zonal Screening Committees and the Chief-Commissioners of Central Tax to stress upon consumer awareness programmes. Launching a helpline to resolve the queries of citizens regarding registration of complaints against profiteering. Receiving complaints through email and NAA portal. Working with consumer welfare organizations in order to facilitate outreach activities.