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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 Explanation to Section 171, the expression 'profiteered' means the amount determined on account of:

Profiteered means the amount determined on account of not passing the benefit of a reduction in tax rate, or the benefit of input tax credit, to the recipient through a commensurate reduction in the price of the goods or services or both.

  1. ANot passing the benefit of reduction in rate of tax or of input tax credit to the recipient by way of commensurate reduction in priceCorrect
  2. BCharging a price higher than the market price of competitors
  3. CClaiming input tax credit in excess of the tax paid on inward supplies
  4. DEarning a profit margin above that prescribed by the Authority

Explanation

The statutory definition links profiteering to failure to pass on the benefit of a tax rate reduction or input tax credit through a commensurate price reduction. Market price comparison, excess credit claims and profit margin caps are not part of the definition.

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