1. “Anti Profiteering Under GST law”By
K.N.Hari Hara Prasad
Dy.Director (Cost)
CGST Audit Commissionerate

2. Anti Profiteering under GST law
Section 171 of the Central Goods and Services Tax Act, 2017 provides for Anti Profiteering measure.
As per Sub Section1 of Sec 171 of C GST ACT,2017, “Any reduction in rate of tax on any supply of goods or services
or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.”

3. Anti Profiteering under GST law
Major areas where Anti profiteering cases registered in GST law
Restaurants
Real Estates
Works Contracts
Residential construction services
Malls
FMCG Sector
Pharmaceuticals

4. Anti Profiteering under GST law
The anti-profiteering body under the goods and services tax framework is seeking details on pricing strategies from consumer goods companies and over-the-counter (OTC) drug makers to check whether they have passed on the benefits of reduced GST rates to consumers. 

5. Anti Profiteering under GST law
National Anti-profiteering Authority (NAA) has issued letters to various companies including Mankind Pharma, Johnson & Johnson, and Colgate Pamolive in the last few weeks, questioning their pricing 

6. Anti Profiteering under GST law
Letters seeking details were issued to at least 50 companies in last week alone, and sales heads of these companies were asked to give details of their cost accounting,” the person said. In the past, some companies, including Patanjali Ayurved, Hindustan Unilever (HUL), Procter & Gamble (P&G), Nestle and Hard castle Restaurants, had been either slapped with a fine or questioned for apparently failing to pass on the benefits of a tax rate reduction to consumers. 

7. Anti Profiteering under GST law
Any reduction in rate of tax on any supply of goods or services:
For Example Restaurant Services
Earlier rate of tax is
Service Tax 15%* on 40% value = 6%
Vat 14.5% value of Rs100+(Rs 6 Service tax)*14.5%= Rs total tax is round to Rs 16

8. Anti Profiteering under GST law
In VAT+Service Tax Regime
In the present case the value of goods and supply will works below– Example: Paradise Biriyani
Rs Rs 220 ( Rs 60 ST + Rs 160 VAT) = Rs price to be paid is Rs 1220/- on Rs 1000 value of goods and services excluding vat credit.
VAT credit allowed on above transaction but no CENVAT credit is allowed. VAT credit is 60% value for material cost *14.5%*Rs 600 = Rs 87 say Rs 90 )
Now net price payable by customer is Rs 1220-Rs 90 = 1130

9. Anti Profiteering under GST law
In GST Regime:-
Value of services and goods supplied by Paradize Biriyan is Rs ( 5% GST) works out to Rs payable by Customer. Hence price of Paradise biriyani reduces to that extant of Rs 70 i.e ( ) no credit allowed, no composition is allowed. That is 7% reduction to be passed on to customer

10. Anti Profiteering under GST law
Who is the looser in this transaction? On Rs 1000/- worth of goods and supplies made.
Sl.No
State Govt
Central Govt
Assessee
Customer
In Pre-GST
Rs = 64 60
1000
124
In GST 25 50
Savings
-39
-35 74
7.4% benefit to be pass on to the customer by loosing State and Central Government share in GST regime.

11. Anti Profiteering under GST law
the benefit of input tax credit shall be passed on to the recipient.
In pre-GST regime who are opted composition VAT scheme for works contract/residential complex service they are not allowed to take input credit in pre-GST regime.
In case of Service tax they are not allowed to take in put service credit they allowed to pay ST on 25% value.

12. Anti Profiteering under GST law
Example:
Base price of the Flat 30,00,000
*In Pre GST
**In GST
Base Price
30,00,000
Vat 1.25%
37500
Service Tax
1,12,500
Total Tax
1,50,000
3,60,000
Value with taxes
No Credit allowed
** Input credit and input service credit allowed
31,50,000
33,60,000

13. Anti Profiteering under GST law
Input services and input credit under GST law
Composition of base price
1/3rd Land cost
1/3 Services cost
1/3 Material cost
Out of 100% base price, taxable person can take 1/3+1/3 GST paid on services received and material received eligible to take ITC credit

14. Anti Profiteering under GST law
Subject
Comparative analysis in two tax regimes
In Pre GST
In GST
difference
Base Price+ taxes
31,50,000
33,60,000
+1,60,000
Value of inputs
10,00,000
Value of input services
GST 18% paid
On value of services and inputs received
3,60,000
-3,60,000

15. Who is the looser? Sl.No State Govt Central Govt Assessee Customer
In Pre-GST
37,500
1,12,500
30,00,000
1,50,000
In GST
60,000
1,20,000
Savings
+22,500
-52,500
+30,000
*Input and
Input services credit
3,05,100
Total benefit from input credit as well as rate difference pass on to customer
3,35,100
Total price payable by customer including taxes in GST( 30,00,000-3,05,100)+1,20,000
28,05,000
Total price payable by the customer with Service tax is Rs
31,50,000
Difference (30,00,000-28,05,000) 6.5% on base price will benefitted to customer ( we ordered 6% Tentative ) RINL 6.37%
1,95,000

16. Areas of benefit of input tax credit
Central SalesTax
Stock Transfers to Depots.
Entry Tax, Octroi, Local Body Tax(LBT).
Savings arising from non payment of LuxuryTax, Entertainment Tax.
Non reversal of proportionate Cenvat credit under Rule6(3) of Cenvat Credit Rules,2004.

17. areas of benefit of input tax credit available in GST
Purchase Tax/URD
Cenvat Credit on Furniture, Storage racks, Assets used in Office etc capitalized in books of account.
Admissibility of input tax credit on inputs(ED as well VAT)used by service providers.
Developers, Builders, Construction contractors.

18. Areas of benefit of input tax credit available in GST
Carrying out process which does not amount to manufacture.
Input tax credit is available to wholesalers, retailer hotel, restaurants ,outdoor caterers etc.
Availability of credit on opening stock.
Local Body Tax on job work.

19. Areas of benefit of input tax credit available in GST
Price Reduction on input supplies by vendors.
Refund of accumulated credit on account of inverted duty structure.
Duty paid on captively consumed goods.
Abolition of Cesses.
Transitional provisions

20. Objective of Anti profiteering
In simple words, it meant that if businesses failed to pass on higher availability of credit, and therefore lower input costs, to the ultimate consumer, they could face penal action.
Mostly, this meant that GST benefits must result in a fair reduction of prices. 

21. Objective of Anti profiteering
To counter these anti-profiteering rules became a must. Thus, anti-profiteering measures at the retail level to protect consumers from price hikes were initiated. These rules were initiated in India to avoid making any profits on cost of others. 

22. Objective of Anti profiteering
The best part under GST is that mostly all industries will be affected with respect to passing of credit benefit due to a better credit claiming mechanism under the this regime.
Be it service sector, manufacturing, trading, or any specific industry, all are going to gain due to a better flow of input tax credit (except sectors having zero-rated output supply) 

23. Do’s and not Do’s in Anti profiteering
Do proper credit pass on to customer.
Do Receive all services and Materials from Registered persons only.
Do file Transitional Credits in proper tables in Tran-I
Do Avail all benefits of GST in form of Rate change as well as input credits on inputs, capital goods and input services.
Do avail correct refunds in time for excess ITC available in account

24. Do’s and not Do’s in Anti profiteering
Do Maintain correct records for inputs held on stock on or before
Do Maintain correct records for Capital goods purchased, 50% credit taken in previous year
Do File Tran-II where invoices not available ( Dealers cases)
Do file correctly all GSTR-1 to GSTR-9 9C including GSTR-B.

25. THANK U