Govt scans prices for profiteering as tax cuts kick in

As the biggest reform in India's goods and services taxes (GST) rolls out today, the Centre will be monitoring whether companies actually pass on the tax cuts or keep the gains to themselves.

- Gireesh Chandra Prasad gireesh.p@livemint.​com NEW DELHI

The government will keep a "discreet oversight" on how the tax cuts unfold, but avoid any intrusive use of administrative machinery, two persons privy to official discussions said.

However, it will not hesitate to put in place a formal mechanism if corporate profiteering manifests.

The Centre is optimistic that businesses will honour their public commitments to reduce prices, but the option of a formal enforcement mechanism has not been ruled out if consumers fail to see the relief, the people cited above said on the condition of anonymity. The tax cuts followed Prime Minister Narendra Modi's promise of tax relief in his Independence Day speech. Finance minister Nirmala Sitharaman has committed to ensuring that the benefits reach households.

All government departments are conscious of the need to ensure consumers benefit and will be watching prices, one of the two persons cited above said. The government's engagement with the industry will be of "vigilance and gentle persuasion" rather than invoking any administrative powers, the person added.