1. ANTI- PROFITEERING IN GST

2. ANTI PROFITEERING
Clause 171 in the GST bill which provides that it is mandatory to pass on the benefit due to reduction in rate of tax or from ”INPUT TAX CREDIT” to the consumer by way of proportionate reduction in prices.
OBJECTIVE: To protect consumers from inflation after GST implementation

3. COMPUTATION – change rate
Particulars
Old System
Anti Profiteering System
Purchase Price (assumed)
100
Excise in 10% 10 -
Price for VAT / GST
110
VAT on 10% / 12% 11 12
Final Sale Price
121
112
Benefit to Customer 9

4. COMPUTATION – input tax credit
Particulars
Old System
Anti Profiteering System
Input Tax Credit (Excise)/ GST
100
320
Input Tax Credit (Service Tax) -
Input Tax Credit (VAT)
Total Credit
300
Benefit to Customer 20

5. COMPUTATION -transition
Particulars
Old System
Anti Profiteering System
Purchase Price (assumed)
105
Tax in Purchase (105*5/105) 5
Net Purchase Price
100
Net Sale Price assuming 10% profit
115.5
110
Tax on 5%
5.78
5.5
Final Sale Price
121.28
Benefit to Customer

6. COMPUTATION – same rate
Particulars
Old System
Anti Profiteering System
Purchase Price (assumed)
100
Excise in 10% 10 -
Price for VAT / GST
110
VAT on 10% / 20% 11 20
Final Sale Price
121
120
Benefit to Customer ?

7. How does it work ?
As per Malaysian Regulations of Price Control & Anti Profiteering, Unreasonable Profit is calculated by-
Evaluating Profit Margins between 01/07/2017 to 31/12/2017
Compare to
Net Profit Margin – 01/04/2017 to 30/06/2017 (excluding Taxes) does not exceed margins as on 31/03/2017
Net Profit Margin – 01/07/2017 to 30/09/2017 (excluding GST) does not exceed margins as on 30/06/2017

8. ANTI PROFITEERING - ISSUES
COST SHEET: Pre and post GST cost sheet of each product to calculate the pre-GST tax rate and post-GST tax rate for each and every item to understand the quantum of tax benefit that a supplier should get and pass on
PROFIT CALCULATIONS: Will it be net basis or gross basis
WHEN TO PASS ON THE BENEFIT?

9. ANTI PROFITEERING - ISSUES
Anti-profiteering is a transitional provision??
Rules Not Specified
Establishment of an authority against anti-profiteering in order to ensure its compliance – CCI?
Movement in prices due to demand-supply scenario, competition, prices of a commodity in international markets, the level of the currency and so on?