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Taxation

A thorny GST regulation is hurting FMCG companies. How fair is it?

The government wants companies to pay up for not passing on GST benefits to consumers. But fuzzy regulation that doesn’t answer critical questions is not making compliance easy.
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soumyagupta
15 May 2018 6 Mins Read 0 comment
Victoria 1/Shutterstock
Victoria 1/Shutterstock
What is happening? One of the more contentious provisions in the goods and services tax (GST) framework is coming home to roost: See-sawing GST rates from last year have created a shadow of “profiteering” on India’s consumer-goods companies. The government has begun asking firms to pay up for having made undue profits by not lowering the prices of several goods
tax rates. This is because, as noted above, the anti-profiteering law does not specify how and by when prices should be dropped after taxes are lowered. However, companies seem to have reconciled to the regime for the time being — most have already made back-of-the envelope calculations on how much they might owe in “profiteered” margins, this source says.
What is happening? One of the more contentious provisions in the goods and services tax (GST) framework is coming home to roost: See-sawing GST rates from last year have created a shadow of “profiteering” on India’s consumer-goods companies. The government has begun asking firms to pay up for having made undue profits by not lowering the prices of several goods tax rates. This is because, as noted above, the anti-profiteering law does not specify how and by when prices should be dropped after taxes are lowered. However, companies seem to have reconciled to the regime for the time being — most have already made back-of-the envelope calculations on how much they might owe in “profiteered” margins, this source says.

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