Definition
GST Anti-Profiteering
Anti-profiteering rules under GST require businesses to pass on the benefit of rate cuts or extra input tax credit to consumers through lower prices.
When the GST Council cuts a rate or a business gains additional input tax credit, the law expects that benefit to reach consumers rather than be pocketed as higher margins. Anti-profiteering provisions empower an authority to investigate and order businesses to refund or deposit undue gains.
The rules have generated significant litigation over how to measure the benefit and at what level — product, outlet or company. The function has been handled by designated authorities over time, reflecting an evolving approach to ensuring GST benefits consumers.
Related terms
- Input Tax Credit (ITC)Input Tax Credit lets a GST-registered business offset the tax it has already paid on purchases against the GST it collects on sales, so tax is levied only on value added.
- GST SlabsGST slabs are the multiple tax-rate categories under GST into which goods and services are classified, ranging from nil-rated essentials to higher rates on luxury and sin goods.
- GST CouncilThe GST Council is the constitutional body that decides the rates, exemptions and rules of GST through consensus between the Centre and the states.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.