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Informist, Friday, Sept. 12, 2025

 

NEW DELHI – Given the concern of industry not passing on the full benefit of recent cuts in goods and services tax to end-consumers, the finance ministry has asked its field officers to compile monthly data reports on changes in prices of common-use articles for six months. The new GST rates come into effect Sept. 22. The first data report has to be submitted to the ministry by Sept. 30.

 

In a letter dated Tuesday and addressed to the principal chief commissioners and chief commissioners of central GST zones, the ministry has sought commodity-wise price data on 54 fast-moving consumer goods, foods, educational items, drugs and medicines, cement, and white goods from the field offices and trade associations in their jurisdiction.

 

The letter, seen by Informist, asks the field offices to treat the exercise "on priority". The data have to include the name of the commodity, brand, and maximum retail price before and after Sept. 22.

 

The move follows Finance Minister Nirmala Sitharaman and Revenue Secretary Arvind Srivastava's comments that the ministry will monitor whether the benefits of the GST cuts are being passed on in the absence of an anti-profiteering mechanism. At its meeting last week, the GST Council approved a two-slab structure with tax slabs of 5% and 18%, replacing the previous tax slabs of 5%, 12%, 18%, and 28%, besides a special tax rate of 40% for "sin" goods and luxury items.

 

Abhishek Jain, partner and national head, indirect tax, KPMG in India, said the directive aligns with the government's broader narrative emphasising the need for industry to ensure that the benefits of the GST rate reductions are passed on to consumers. "With expectations of close monitoring by the authorities, businesses would be well-advised to proactively revisit their pricing and implement robust mechanisms to ensure that the benefits of the rate revisions are appropriately and transparently passed on," he said.

 

The risk of profiteering is ever present. There have been occasions in the past when cuts in tax rates announced by the GST Council were not passed on to consumers. Instead, companies increased their profit margins. In November 2017, after the council reduced GST on restaurants to 5% from 18% and 12%, anti-profiteering investigations were initiated against some restaurants that did not pass on the benefit to customers.

 

GST was rolled out on Jul. 1, 2017. In November 2017, the government set up the National Anti-Profiteering Authority to check profiteering by manufacturers and suppliers. Its role included recommending punitive action against violators. The authority was subsumed into the Competition Commission of India on Dec. 1, 2022. The competition watchdog then passed the baton to the principal bench of the GST Appellate Tribunal to hear anti-profiteering complaints.

 

The GST Council had, at its 53rd meeting, decided to introduce a sunset date for filing anti-profiteering cases to give businesses the autonomy to set prices for goods and services without fear of being investigated for breach of anti-profiteering provisions. Under the anti-profiteering provisions of the GST law, it is mandatory for suppliers of goods and services to pass on the benefit of any reduction in the tax rate or benefit of input tax credit to recipients by way of a commensurate reduction in prices.  End

 

Reported by Priyasmita Dutta

Edited by Rajeev Pai

 

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