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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Compliance Rating, Anti-Profiteering, GST Practitioners and Authorised Representative

Under the anti-profiteering provision of the CGST Act, 2017, which of the following must be passed on to the recipient by way of a commensurate reduction in prices?

Both a reduction in the rate of tax on a supply and the benefit of input tax credit must be passed on to the recipient through a commensurate reduction in prices, as section 171(1) of the CGST Act provides. It is not limited to only one of them.

  1. AAny reduction in rate of tax on a supply, or the benefit of input tax creditCorrect
  2. BOnly a reduction in the rate of tax, and not the benefit of input tax credit
  3. COnly the benefit of input tax credit, and not a reduction in tax rate
  4. DAny increase in the cost of raw materials incurred by the supplier

Explanation

Section 171(1) requires that any reduction in rate of tax on any supply of goods or services, or the benefit of input tax credit, be passed on to the recipient through a commensurate reduction in prices. Limiting it to only one of the two benefits is incorrect, because the provision covers both.

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