GST Relief May Not Reach Consumers If Anti-Profiteering Is Not Enforced, Cautions SEBI Analyst

The analyst said the real test will be whether businesses pass on GST savings to consumers, warning that profiteering could trigger refunds, penalties, or even cancellation of registrations.

The government’s proposed reduction in GST rates is aimed at cutting costs for consumers and spurring demand. 

SEBI-registered analyst Sumesh Guleria said the timing is significant, coming soon after the RBI’s interest rate cuts, and could act as a booster shot for consumption.

Guleria explained that the move also touches on the popular narrative that “everything wrong in society is because of GST,” adding that by cutting rates, the government is addressing both the economic slowdown and long-standing public sentiment around the tax.

The analyst stressed that the most important aspect for consumers to understand is anti-profiteering, covered under Section 171 of the CGST Act. 

In the past, he said, some sellers did not pass on the benefits of lower GST rates to end buyers. Instead of reducing prices, they kept them unchanged and pocketed the tax savings as higher margins. Such practices are illegal.

Guleria gave an example: if GST on a product is reduced from 28% to 18% but the price remains the same, that amounts to anti-profiteering. In such cases, complaints can be filed, and if found guilty, the company could face strict action.

He outlined the possible consequences for violators, which include being ordered to cut prices, refunding consumers with 18% interest, paying penalties, and in extreme cases, cancellation of GST registration.

Guleria also noted that the government had earlier notified that no new complaints would be entertained under the anti-profiteering law from April 1. 

However, he said, given the push to boost consumption and improve public perception, there is a possibility that the law may be extended or reinstated if complaints start piling up that prices have not come down despite GST rate cuts.

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