Home / Politics / Policy /  Anti-profiteering body to be folded into CCI

NEW DELHI : GST anti-profiteering watchdog National Anti-profiteering Authority (NAA) is set to be subsumed into the regulatory ecosystem of the Competition Commission of India (CCI), with no extension being planned for NAA beyond November when its term ends.

The plan for subsuming NAA into CCI stays, and no extension is being discussed, said a government official, who asked not to be named. NAA, set up in 2017, was given two extensions.

The regulatory functions of the anti-profiteering watchdog and its investigation arm will in some form continue under CCI, said a second official, who also spoke on condition of not being named. The move indicates the belief among policymakers that continuing with a standalone body for checking GST-related profiteering practices by businesses may no longer be required when a specialized body with legal and economic expertise, CCI, can protect consumer interest in such cases. This move will reduce the multiplicity of regulators.

Besides, the medium-term GST policy goal is to rationalize rates to mitigate the erosion of the tax base due to multiple rate cuts over the last five years. The role of the profiteering watchdog is relevant when tax rates are lowered, and it has to be ensured that the benefit of rate reduction immediately reaches the consumers. It has little to do when rates go up.

However, authorities are still getting several complaints relating to the early years of GST, alleging that the benefit of input tax credit that became available to businesses in the new indirect tax regime has not been fully passed on to consumers. Investigating and adjudicating on these would warrant the continuation of the anti-profiteering regulatory architecture, said a third person, who also spoke on the condition of anonymity.

Anti-profiteering provisions in GST law have faced challenges in their implementation, given that companies have the pricing freedom in a free-market economy and nothing prevented them from raising the price exclusive of taxes. The plan is to transfer cases with the NAA to CCI after its term ends.

Sectors that faced NAA’s regulatory action most were eateries, cinemas, real estate and fast-moving consumer goods. In many cases, especially of real estate firms, the regulator ordered the business to return the allegedly overcharged amounts to the consumer.

For businesses, the challenge has been the absence of any sector-specific guideline and standard operating procedures for computing the commensurate reduction in prices of goods or services warranted by a GST rate reduction or grant of any previously unavailable input tax credit benefit.

Since raw materials procured in bulk are used across different products in many industries, accurately apportioning the tax benefit to be passed on to consumers on each of those products has been a tough task for businesses. An email sent to the finance ministry, the NAA, and the GST Council on Friday seeking comments on the story remained unanswered at the time of publishing.


Gireesh Chandra Prasad

Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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