Anti-profiteering body not set up as ease of biz given priority

Compensation cess on tobacco likely to be eliminated by Dec

- Rajeev Jayaswal

The government did not form an anti-profiteering body to penalise non-transmission of GST rate cuts to the consumer on the industry's assurance and in line with the philosophy of making the tax regime and compliance to it simpler, much like it has done with simplified registration, expeditious refunds, and ease of compliance, two officials familiar with the matter said.

They added that this is based on the observation that lower tax rates enhance voluntary compliance. This made the government decide against reestablishing a body like the erstwhile National Anti-Profiteering Authority (NAA), they said, requesting anonymity.

On Wednesday, following a meeting of the GST Council, the government announced a sweeping overhaul of the GST regime, with most goods and services now charged at the rates of 5% and 18%, with only so-called demerit goods and sin products being charged at 40%. Many products have moved from 18% or 12% to a rate of 5%. And some have moved from 28% to 18%.

Speaking on the rationale of not creating a formal anti-profiteering body on Wednesday, revenue secretary Arvind Shrivastava said the Central Board of Indirect Taxes and Customs (CBIC) and state tax agencies would engage with the industry to ensure transmission of benefits to the people.

He said the GST system is increasingly becoming compliant with lower tax rates. When the average tax rate was 15.5% at the beginning of the GST system, the compliance was around 85-90%, now the compliance has improved to almost 97% with rates coming down, he explained. The revenue secretary is the ex-officio secretary to the GST Council.

Citing the experience with the erstwhile anti-profiteering body NAA, he said, “Only 704 cases were registered with the authority and 60% of the cases were initiated” within the first two-three years of GST implementation and the total profiteering amount that was alleged were ₹4,362 crore.”