Pune: With ample confusion in the minds of citizens with regard to the newly rolled out Goods and Services Tax (GST), the Additional Commissioner of Central GST in Pune, Surendrakumar Mankoshkar, has urged people to be aware and report profiteering activities.
The government has introduced anti-profiteering measures to check such practices.
Anti-profiteering in general means preventing businesses or service providers from making an extreme profit. It makes way for passing on the benefits of a reduction in the tax rate or from input tax credit to the consumer by reducing prices of products or services.
The anti-profiteering clause has been added to the GST Bill mandating the passing on of benefits of the reduction to the consumer. A National Anti-profiteering Authority (NAA) will be set up to investigate complaints of profiteering.
Speaking on Saturday, Mankoshkar said numerous businesses are going to receive necessary ‘set-offs’ due to the provision of input tax credit. “While entities are receiving input tax credit, it is necessary for them to pass on the appropriate benefits to the consumer. Businesses must pass on the benefits of price reduction to consumers, who need to be aware and report profiteering activities, in case price benefits are not passed down,” he said.
Input Tax Credit means the tax that one has to pay on output can be reduced against the tax one has paid on inputs. For example, if the total tax payable on the final product (output) is Rs 300 and one has already paid Rs 200 in tax while making purchases (input), they can claim input credit of Rs 200 and are entitled to pay only Rs 100 in taxes.
Giving an example of the real estate industry, Mankoshkar said the industry can now avail numerous set-offs, which should prompt developers to reduce the cost of units they sell. “There are nearly 160 products or services, against which developers can claim input credit. This includes procurement of equipment for construction, construction material, electrical fittings, consultants such as architects, contractors and others. As builders are paying the tax while procuring these products or services, they can claim input credit and pay only the difference between output tax and input tax. All the set-offs put together comes up to nearly Rs 600 to Rs 700 per square foot. This should result in a reduction in real estate prices,” he said.
Mankoshkar said traders and businessmen need to understand that they, by giving necessary benefits, will only attract more consumers. “If one is getting set-offs or input credit at various levels, they must pass it on to consumers. There is no need to increase prices. A price reduction will only attract consumers,” he added.
Effect on prices
Clearing doubts about several products getting expensive, Mankoshkar said GST rates have been misinterpreted, due to which people feel that products are going to get expensive. “People are saying that biscuits are going to get expensive as they have been put under the 18 pc bracket under GST.
However, people are equating the 18 per cent only against say VAT of 13.5 pc. The other taxes like excise, octroi and others are not being added. The current tax incidence on biscuits is 13.5 pc VAT, six per cent excise and other taxes. Only with VAT and excise, the tax rate is 19.5 per cent. So, the 18 pc tax slab will make biscuits cheaper not expensive,” he said. Mankoshkar said similar is the case for gold and many other products. “GST has replaced nearly 21 indirect taxes that were being levied at various levels. We were paying taxes on taxes. Now, we will pay taxes on products or services,” he said.