NEW DELHI: India has extended the anti-profiteering framework under the goods and services tax (GST) by another two years while also making the rules more stringent to ensure companies pass on the benefit of lower taxes to consumers.
The GST Council, the apex decision-making body for the levy, decided on Friday to extend the tenure of National Anti-profiteering Authority (NAA) and approved the imposition of an additional penalty of up to 10% of the profiteered amount if companies don’t pay up fine in 30 days. At present, companies have to deposit a penalty of Rs 25,000. ET had reported on May 16 that the framework may remain in place for another two years, having originally been scheduled to end this year.
The 35th Council meeting, the first to be chaired by finance minister Nirmala Sitharaman, gave in principle nod to an electronic invoicing system for companies and e- ticketing for multiplexes. It also allowed use of Aadhaar for registration under GST and extended the deadline for filing of annual returns by two months to August 31.
“We had very meaningful discussions,” Sitharaman told reporters after the meeting. In her opening remarks, she said the Council has much work to do, including simplification of rules, rationalisation of rates and bringing more items under the levy’s ambit, according to a tweet by the ministry of finance.
Need for Clarity: Experts
Asked about rate rationalisation, she said this would form part of simplification. Revenue secretary AB Pandey said the NAA’s term had been extended.
Experts said the anti-profiteering framework needs clarity.
“While the extension of term of National Anti-profiteering Authority (NAA) by two years was expected, one would hope that the government would come up with detailed guidelines and seek to restrict the same only in case of consumer complaints,” said Pratik Jain, national leader, indirect taxes, PwC.
“Industry demand for clarity on methodology for anti-profiteering has still not been addressed by the government,” said Waman Parkhi, partner, indirect tax, KPMG in India.
FITMENT PANEL TO DECIDE ON EV TAX RAT
Proposals to cut GST on electronic vehicles (EVs) to 5% from 12% and on electric chargers to 12% from 18% have been referred to the fitment committee. What the GST rate should be on leased EVs has also been sent to the committee.
The taxation of lotteries has been referred to the attorney general seeking his view on the issue, as there has been a Calcutta High Court judgment and there is a petition before the Supreme Court. Sitharaman said the reference is limited to the point whether a product being one good can be taxed differently or not under the GST. Right now private and state-run lotteries face differential rates. A state-organised lottery attracts 12% GST while a state authorised lottery attracts 28% tax.
An eight-member group of state finance ministers could not reach a consensus on whether a uniform tax rate should be imposed on lotteries or the current differential tax rate system be continued.
The council also decided to introduce e-invoicing in a phased manner for business-to-business (B2B) transactions. “E-invoicing would help tax authorities in combating the menace of tax evasion,” a statement said. Phase 1 is proposed to be voluntary and will be rolled out in January 2020. Registered multiplexes will be required to issue tax invoices electronically. E-tickets issued by them shall be deemed to be tax invoices.
“Decision to implement e-invoicing model means that technology will continue to play a critical role in tax administration,” Jain said.
The council also decided on the location of state and area benches for the Goods and Services Tax Appellate Tribunal (GSTAT) for various states and Union Territories that have legislatures. It has been decided to have a common state bench for Sikkim, Nagaland, Manipur and Arunachal Pradesh, the official statement added.
The revenue secretary said the new GST return filing system will be applicable from January 1, 2020.
The anti-profiteering system was meant to shield consumers against any sudden spike in prices after GST was rolled out in July 2017 and to ensure that companies passed on savings from lower taxes to buyers. Several countries that implemented GST had faced a spike in inflation soon after doing so. India had looked at the mechanisms that Malaysia and Australia had put in place as part of their GST framework. The Union cabinet approved constitution of the NAA on November 16, 2017.Share: