With a view to passing the benefits of tax rate reduction or input tax credit to consumers in the GST regime, consumers may get volume benefit in lieu of only price reduction as the National Anti-Profiteering Authority (NAA) is allowing ‘grammage increase’, an official said here on Friday.
If a supplier of goods increases the grammage or volume to pass on the benefit of tax reduction or input tax credit to consumers, instead of lowering prices, the question arises, and then what would happen?, said NAA Chairman B.N. Sharma.
“The law says (that) reduction in the rate of tax or the benefit of the input tax credit is passed on to the recipient by way of commensurate reduction in prices.
“As trade facilitator, the authority would see the intention of the supplier. We have to see this in a larger context. In that case, we took the risk and allowed it,” he said in an interactive session at the Merchants’ Chamber of Commerce and Industry here.
Sharma, however, mentioned the grammage increase has to be “proportionate” to the tax reduction.
He also said the authority would examine the timing of passing such benefits and the volume benefits should not be part of ongoing business promotion.
Clarifying the authority’s role, Sharma said it is not a “price regulator” and is “not mandated even to issue sectoral guidelines”.
He added that the MRP is inclusive of cost, margin and tax and anti-profiteering deal with the tax component in it.
According to him, anti-profiteering activities must be seen from the lens of the consumers.