Under the Goods and Services Tax law, suppliers are required to pass on benefits of reduction in the rate of tax or the benefit of input tax credit to the end consumers by way of “commensurate reduction” in prices. This is contained under section 171 of the CGST Act, 2017. The wilful action of not passing on the above benefits to the recipients in the manner prescribed is known as “profiteering”. Over the two year-course of the GST regulation, multitude of companies including FMCG major Hindustan Unilever Ltd, and Jubilant FoodWorks have come under the anti-profiteering lens. Further, judicial proceedings are underway in case of many companies such as Nestle, P&G India, Johnson & Johnson, Tata Starbucks, among others. A total of more than 65 orders alone have been so far pronounced by the National Anti-Profiteering Authority (NAA), a body set up to deal with the consumer complaints against profiteering by companies, and one that recently got a two year … [Read more...] about Two Years of GST: Are standard rules really required in anti-profiteering regulation?
Why operating profit margin decrease
National Anti-Profiteering Authority (NAA) has dismissed allegations of ‘profiteering’ against Xiaomi, bringing in respite for the Chinese mobile manufacturer.“…We do not find the present case to be a case of profiteering as had been alleged…,” read the order from NAA dated 10 February 2020. NAA is a body set up to deal with the consumer complaints against profiteering by companies.In the case, the complainant had alleged Xiaomi did not pass down the benefits of reduction in the goods and services tax rates for its article Power Bank. The GST council had slashed the rates of power bank from 28 per cent to 18 per cent in December 2018, which was effective from Jan 1, 2019. Xiaomi contended this saying it had classified the ‘power bank’ item as lithium ion batteries on which the rate notification was never applicable and which always attracted a levy of 18 per cent. It had therefore kept the selling prices of the powerbank unchanged, the … [Read more...] about NAA dismisses profiteering allegation against Xiaomi
The anti-profiteering provisions under the Goods and Services Tax regulation has been grabbing headlines over the last few months. A slew of companies, including the retail major, Hindustan Unilever, have been handed notices for allegedly failing to pass on the benefits of GST to customers.Against such a backdrop, Godrej Consumer Products’ CFO, Srinivasan Vishwanathan discusses how his company is coping with the regime. Here in an interaction with ETCFO’s Mannu Arora he shares more details. Edited excerpts: Anti-profiteering compliance under GST is one hot topic of discussion among CFOs. How are you making decisions around price revisions in the post-GST regime?Srinivasan Vishwanathan: If you are asking me in the context of recent rate changes, none of our products are in that list. In the sense we don’t get any benefits or additional cost due to the changes that have been announced (in the 28th GST Council Meeting).Of course, initially in July last year when the GST … [Read more...] about GST & anti-profiteering compliances are evolving: CFO, Godrej Consumer Products
New Delhi: The net profit of operating central public sector enterprises (CPSEs) rose 15.52 per cent on-year to Rs 1.43 lakh crore in FY19, even as 70 loss making CPSEs reduced their overall losses by 1.69 per cent in the same period to Rs 31,635 crore, noted the Public Enterprises Survey-2018-19 tabled in Parliament on Monday. The survey, brought out by the department of public enterprises under ministry of heavy industries and public enterprises on performance of CPSEs, further noted that profit of 178 profit making CPSEs was up nearly 12 per cent on-year to Rs 1.74 lakh crore. As per the survey, of the total 348 CPSEs as on March-end, 249 were operational, while the remaining 86 were under construction and 13 were under liquidation. The number of profit making and loss making companies was lower than the previous fiscal. “Overall net profit of operating CPSEs during 2018-19 stood at Rs 1,42,951crore as compared with Rs 1,23,751crore during 2017-18, showing a growth in … [Read more...] about Operating CPSEs’ net profit rises 15.5% in FY19
NEW DELHI: GST officers have one more task — conduct mock purchases to identify businesses that are not passing on benefits of lower taxes to consumers. With several stores and sectors such as real estate and restaurants found wanting, the government has decided to “proactively” use the provision of the Central Goods and Services Tax (CGST) Act to collect evidence against suppliers, who are “profiteering” by either keeping prices unchanged or not transferring the gains of credits for taxes paid on inputs and raw material. The move comes as part of the government’s anti-profiteering drive, which is set to intensify in the coming days as commissioners have been given specific targets to identify 20 suppliers each and check their B2B invoices to ascertain if tax rate changes are being passed on or not as part of the exercise. Commissioners have also been allowed to set up specialised anti-profiteering cells. The initiatives come along with the extension … [Read more...] about GST profiteering: Government to build case with proof