Govt can revive anti-profiteering authority to ensure GST rate cuts reach consumers

Even as the central government says there are no plans to take coercive measures to ensure Indian industry and businesses pass on the benefits of reduced Goods and Services Tax (GST) rate to the consumer, there is an existing provision within the Central Goods and Services Tax Act, 2017 that can be put into action with just a simple notification, if situation warrants so.

The Section 171 of the CGST Act, 2017 clearly spells out that  any reduction in the rate of tax on any supply of goods or services, or the benefit of input tax credit should be passed on to the recipient by way of commensurate reduction in prices.

In fact, a National Anti-profiteering Authority (NAA), established under the provisions of this Act, was in existence till March 31, 2025 to monitor whether GST rate cuts resulted in the reduction of consumer prices. For the government, all it takes would be to revive NAA with retrospective effect through a notification if it becomes evident that the benefits are not passed on to the consumer.

The NAA was set up in accordance with the Section 171 of the Act which says that the central government may, on recommendations of the Council, by notification, constitute an Authority or empower and existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

On September 30, 2024, the government had notified that after March 31, 2025 the authority will not accept any request for examination of tax reduction and actual reduction in price of goods or services, and thereby shutting down NAA for all practical purposes.

The Opposition parties have already started asking for an adequate mechanism to make erring companies accountable for not passing on the GST benefits to end consumers.

In a recent social media post, Congress leader Jairam Ramesh had asked when will the NAA have a fresh lease of life and how will it be ensured that the rate cuts do not benefit only a favoured few.