Tuesday, March 21, 2023
HomeTalk PointTalk Point: GST anti-profiteering body may increase corruption, red tape

Talk Point: GST anti-profiteering body may increase corruption, red tape

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Under GST, the government is setting up a National Anti-Profiteering Authority to ensure businesses do not cheat consumers. The new authority will ensure the benefit of reduced prices under the new indirect tax regime is passed on to consumers, said Law Minister Ravi Shankar Prasad.

The authority has the power to impose penalties and even cancel the registration of a business if it does not pass the benefits of GST to consumers. The authority will also devise a method to return the money to consumers.

Will the creation of the National Anti-Profiteering Authority address consumer concerns or will it impair business?

The GST structure has been seeing a variety of changes and modifications of late. One may say these changes have been made in view of the Gujarat elections or the numerous opposition movements and trader strikes protesting against the new tax structure, but the pro-active approach of the government is commendable here.

The reduction of GST tax rates on a large number of items and the recent formation of the National Anti-Profiteering Authority are such instances of pro-activeness of the government.

The GST rate for restaurants were reduced from 18 to 5 per cent, but the benefit was not passed on to the consumers. This was given as one reason for the formation of anti-profiteering body.

Here are other sharp perspectives on the National Anti-Profiteering Authority:

Avi Singh: advocate and Additional Standing Counsel for the govt. of NCT, Delhi
Amol Kulkarni: fellow, CUTS International
Mandar Kagade: consultant with Finance Research Group at IGIDR

This cause-and-effect, however, fails to address the real problem here. With the reduction in GST rates, input credits were also reduced for restaurants and that is the real reason why they have increased the cost of their items. This is the reason why the consumer ends up paying the same amount as earlier. The formation of anti-profiteering committee seems needless in this case.

Another factor which cannot be ignored is the corruption in excise and customs departments. The anti-profiteering body does have a good chance of becoming another bureaucratic layer which needs to be bribed to keep your restaurant/business running.

The government may very well have good intentions behind the formation of this body but it remains to be seen how it will be implemented in the coming days. Consumers can only hope that it is not an attempt by the government to push away the blame for faulty GST rollout from itself and put it on the small businesses. Will the customers really be benefited or will small businesses be experiencing another wave of harassment? Only time will tell.

Dhruv Rathee is an activist and YouTuber

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