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CMA Final · Indirect Tax Laws and Practice · Anti-profiteering

Under the anti-profiteering provisions of the CGST Act, 2017, a registered person is held by the Authority to have profiteered Rs 4,00,000. What penalty is leviable if the amount is not deposited within the permitted period after the order?

The penalty is Rs 40,000. Section 171(3A) imposes a penalty equal to ten per cent of the profiteered amount, and ten per cent of Rs 4,00,000 is Rs 40,000, payable where the profiteered sum is not deposited within thirty days of the order.

  1. ARs 40,000, being ten per cent of the profiteered amountCorrect
  2. BRs 20,000, being five per cent of the profiteered amount
  3. CRs 4,00,000, being equal to the profiteered amount
  4. DRs 80,000, being twenty per cent of the profiteered amount

Explanation

Section 171(3A) provides a penalty equivalent to ten per cent of the amount profiteered. Ten per cent of Rs 4,00,000 is Rs 40,000. The 5% and 20% figures have no basis in the text, and a penalty equal to the full amount confuses the penalty with the profiteered amount that must be deposited.

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