Companies held to be guilty of ‘profiteering’ under the goods and services tax (GST) regime could be asked to forfeit the amount in question, which could be deposited with a consumer welfare fund to be created for the purpose, say officials.
The contours of a monitoring body are expected to be taken up during the 16th GST Council meeting on Sunday. The new tax is to take effect from July 1.
“The law provides that a supplier pass on to consumers the benefit of lower prices on account of reduction in tax incidence,” explained an official.
Any profiteering will be decided on a product basis, not earnings at an entity level. So, if a company is into four product lines and having losses but profiteering on one of its products, it will be held liable.
Currently, there is no provision under indirect tax laws to penalise those not passing on tax-related benefits to consumers. The GST legislation says doing so is mandatory.
The anti-profiteering panel will be set up by the GST Council, comprising officials from both the Centre and states. “The body will lose its meaning after a year but a definitive time frame might not be provided,” said the official.
via Firms to forfeit profiteered amount under GST | Business Standard News
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