Anti-profiteering rules will be the key for the smooth implementation of GST
Some traders and their lobbyists have described the anti-profiteering rules in the GST regime as draconian and harsh. While the anti-profiteering authority is yet to be set up, finance minister Arun Jaitley has mooted stringent rules for those attempting to cash-in without passing on the benefit of lower taxes on products and services to consumers.
Getting anti-profiteering rules right is important as it would be the key for the smooth implementation of GST. Much of the criticism against anti-profiteering rules is on the provision for de-registering an outfit after having established that benefit of lower taxes was not passed on to consumers.
Another point of contention for businesses is the huge penalties and punishment, including a possible jail term, proposed by Jaitley and his team. Frankly, there’s not much to crib about the rules, even though the ‘de-registration’ provision does look prohibitive. The idea behind such harsh norms is, perhaps, to discourage companies, businesses and service providers from profiteering by denying the benefit of lower taxes to consumers. The rules have mandated a three-step procedure against errant companies that resort to unreasonable price hikes with the intention of profiteering in the transition to GST. Once violation of rules is proved, the company has no option but to reduce prices, return to consumer the excess charged by way of taxes, failing which authorities have extensive powers to forcibly recover the profiteered money in case the consumer is untraceable.
The provision to set up a consumer welfare fund out of recoveries from profiteering is in line with practices in several countries like US and New Zealand, which have floated dedicated funds to help affected consumers.
As a matter of fact, cases of profiteering should not linger on for eight months, as proposed in the bill. Instead, three months should be enough time to prove or disprove profiteering by a company, even if checks and counter-checks have to be made by a standing committee of experts, director general of safeguards, before the anti-profiteering authority takes a call on the quantum of punishment.
As the countdown has begun to ring in the GST at mid-night of June 30 through a huge bash in the Parliament, yet another apprehension doing rounds is the possibility of technology malware that could hit the GST network. Demonstrating GSTN’s impregnability on the lines of the Election Commission throwing an open challenge to tamper with its voting machines should be attempted.
Building firewalls against cyber attacks on the sensitive GST network will be a challenge, given the kind of intrusions that took place on the Aadhaar network, leading to leakage of sensitive personal data.
Minimising technical glitches, disruptions and smooth transition in the game-changing tax reform should definitely elevate India as the most advantageous nation to do business with.
With the kind of political support that the GST Council has got from the Centre and states, there’s no reason why the historic reform would not be a moment to savour. Businesses should therefore have no excuses to offer seeking delay or postponement, as pointed out by the finance minister. Let the tryst with destiny be a defining moment in the economic history of India.