GST Anti-Profiteering Authority: A Double-Edged Sword?

The GST was meant to reduce tax on consumers. It contained a slew of measures, such as removing cascading of taxes and reducing tax compliance, transportation and other logistics costs. Removal of many taxes was to be achieved by providing a seamless flow of input tax credit to the supply of goods and/or services throughout the supply chain. The availability of input tax credit at every stage of flow of the supplies was to ensure that the incidence of tax was only on the value addition.

All these measures were to result in a drastic reduction of tax and hence cost of goods and/or services, irrespective of the GST rate. Even GST rates, it was assured, would be lower than the total rates of pre-GST indirect taxes like central excise, service tax, state VAT, entry tax, and so on. This was to be made possible by increasing the tax base.

Naturally, the government expected that the benefit of reduction on GST rates and other measures would be passed on to the consumer, thus bringing down the price of goods and services under the GST regime. The government felt that if manufacturers, dealers, and others did not pass on this benefit and made extra profit, it must be returned to the consumer or society through the Consumer Welfare Fund.


With these objectives in mind, the Union cabinet on November 16, 2017, formally approved the setting up of the National Anti-Profiteering Authority (NAPA), with an overarching mandate to ensure that the reduction in tax rates and benefit of input tax credit get passed on to consumers by way of lower prices. The cabinet has also cleared the creation of posts of chairman and members of the Authority. A five-member panel headed by the cabinet secretary has also been entrusted with the task of selecting its chairman and members.


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