The Price Control and Anti-Profiteering Law is essential to alleviate concerns among consumers to ensure that traders and suppliers will not unreasonably increase prices of goods and services in anticipation of the introduction of the Goods and Services Tax (“GST”) regime.
With some countries having seen a rise in inflation after switching over to GST, stringent monitoring would be required to ensure that the benefit of lower taxation is reaching to the common man and control the inflation. This is also when we are heading towards multiple Rate as against Single Rate.
Malaysia, which adopted GST in 2015, introduced an anti-profiteering law besides intensifying enforcement through its National Pricing Council to protect consumers and ensure businesses didn’t take undue advantage of the levy to charge more and make excessive profits.
The concept of anti-profiteering is not new to India. The West Bengal Anti-Profiteering Act, 1958 was enacted to prevent profiteering in certain articles in daily use. The clause of offence of profiteering was – “Any dealer who, profiteers in any scheduled article shall be punishable with rigorous imprisonment which may extend to two years or with fine or both, and (the entire stock or any scheduled article in respect of which) the offence has been committed or such part thereof as the court may seem fit shall be forfeited to the Government.”
The Anti-Profiteering Law will be good move. It will assure consumers that excessive price is not charged by the suppliers. It should be able to stabilize prices for a reasonable time. If there is no such Law, we could potentially end up with soaring inflation rates, like the countries that did not have proper legislation to monitor profiteering practices at the time of GST implementation. The anti-profiteering shall take into account practical aspects such as sudden shift in demand and supply, which usually affects profit margin and not put hardship to the traders.
One of the requirements under the Anti-profiteering Law is that the business is required to maintain detail information at the stock keeping units (SKU) level in order to prove that they are not profiteering. Besides new procedurals update and regular book keeping, the importance of record keeping is more emphasized and the organizations with good costing principles, concepts, system and record will be ever ready to prove that their organization is not profiteering with the introduction of GST. The basic are to show that available more input tax credits are passed on to customer. Systematic costing records of mapping of input tax credit of various goods and services for multiple output of goods / services. CMA are well experienced and trained to deal with input – output and other resource utilization Yes , Organization which are well experienced with keeping of systematic prescribed costing records have edge over others.
When reviewing pricing policies businesses should take into account the provisions of the Anti-profiteering Law and related regulations to ensure that they do not breach any of the provisions under the Law. This is crucial in light of the tough penalties that may be proposed in the Anti-profiteering Law.
The Government can also use the Anti-profiteering Law to ensure that the savings made by Contractors due to implementation of GST should be passed on to the Government.
As on date the Essential Commodities Act, Competitive Commission of India and various other legislations in India like ; Price Control policy is Drug Price Control which is governed by National Pharmaceutical Pricing Authority of Ministry of Chemicals and Fertilizers. give protection to the Consumers, but the new Anti-profiteering Law will be of more significance at the time of GST introduction.
The ultimate intention of the Government is to ensure that consumers don’t suffer because of GST.
(Compiled by – Cost Assistant Vaibhavi Chauhan In Guidance Of CMA Rohit J Vora, Controlling Partner of Rohit & Associates, who can be contacted at Contact@rohitvora.com or on his cell No. 09820217893)
