ANTI- PROFITEERING
IN GST
ANTI PROFITEERING
 Clause 171 in the GST bill which provides that it is
mandatory to pass on the benefit due to reduction in
rate of tax or from ”INPUT TAX CREDIT” to the
consumer by way of proportionate reduction in
prices.
 OBJECTIVE: To protect consumers
after GST implementation
from
inflation
COMPUTATION – CHANGE RATE
Particulars
Old System
Anti Profiteering
System
Purchase Price (assumed)
100
100
Excise in Purchase @ 10%
10
-
110
100
11
12
121
112
0
9
Price for VAT / GST
VAT on Product @ 10% / GST @ 12%
Final Sale Price
Benefit to Customer
COMPUTATION – INPUT TAX CREDIT
Particulars
Old System
Anti Profiteering
System
Input Tax Credit (Excise)/ GST
100
320
Input Tax Credit (Service Tax)
100
-
Input Tax Credit (VAT)
100
-
Total Credit
300
320
0
20
Benefit to Customer
COMPUTATION -TRANSITION
Particulars
Purchase Price (assumed)
Tax in Purchase (105*5/105)
Net Purchase Price
Net Sale Price assuming 10% profit
Tax on Sales @ 5%
Final Sale Price
Benefit to Customer
Old System
Anti Profiteering
System
105
105
5
5
100
100
115.5
110
5.78
5.5
121.28
115.5
0
5.78
COMPUTATION – SAME RATE
Particulars
Old System
Anti Profiteering
System
Purchase Price (assumed)
100
100
Excise in Purchase @ 10%
10
-
110
100
11
20
121
120
0
?
Price for VAT / GST
VAT on Product @ 10% / GST @ 20%
Final Sale Price
Benefit to Customer
HOW DOES IT WORK ?
 As
per
Malay sian
Regulations
of
Price
Control
&
Anti
Profiteering , 2014 - Unreasonabl e Profit is calculate d by Evaluating Profit Margins between 01/07/2017 to 31/12/2017
 Compare to
 Net Profit Margin – 01/04/2017 to 30/06/2017 (excluding Taxes) does not
exceed margins as on 31/03/2017
 Net Profit Margin – 01/07/2017 to 30/09/2017 (excluding GST) does not
exceed margins as on 30/06/2017
ANTI PROFITEERING - ISSUES
 COST SHEET: Pre and post GST cost sheet of each
product to calculate the pre-GST tax rate and postGST tax rate for each and every item to understand
the quantum of tax benefit that a supplier should get
and pass on
 PROFIT CALCULATIONS: Will it be net basis or gross
basis
 WHEN TO PASS ON THE BENEFIT?
ANTI PROFITEERING - ISSUES
 Anti-profiteering is a transitional provision??
 Rules Not Specified
 Establishment
of
an
authority
against
antiprofiteering in order to ensure its compliance – CCI?
 Movement in prices due to demand-supply scenario,
competition, prices of a commodity in international
markets, the level of the currency and so on?