Big Four experts reflect on anti-profiteering measures for GST
As the government looks to clamp down on the profiteering schemes around the latest Goods & Services Tax (GST) regime, senior executives from Big Four accounting and advisory firms are welcoming the move while simultaneously warning against excessive regulatory restrictions.
Two years on from the GST’s implementation in the Indian market, the practical manifestations of the taxation system are coming under scrutiny. For one, current collection levels are considerably high, but still fall short of the government’s revenue targets for the scheme.
Since the introduction of the scheme, businesses across the country have been scrambling to bring their operations within the ambit of the scheme, not only to ensure compliance with the new regulatory paradigm, but also to reap the benefits of the streamlined taxation system.
The advisory sector has been especially busy, as most firms have turned to them for help with implementation. However, one central objective of the scheme – to ensure that employees face a lower tax burden – remains unfulfilled, primarily due to malpractices from companies across the country.
A number of high profile firms are engaged in profiteering, wherein the prices of their goods are not adjusted in line with the lower tax rate, or by retaining the benefits of the tax cuts on raw materials and other inputs. The government has now begun targeted efforts to reduce these inefficiencies.
The government has recently taken a stand against profiteering, and has now formalised this position by appointing special GST officers to examine and evaluate the accounts of a number of suppliers. Executives from the Big Four have welcomed this stand, but offer a nuanced account.
Partner at KPMG India Harpreet Singh said, “Issuance of any clarification or SOP (standard operating procedure) on anti-profiteering measures would always be welcomed by the industry so long as it brings clarity to the end-consumer. If the aforesaid two are not covered, merely covering ancillary issues is not likely to appease the industry.”
Partner at PwC India Pratik Jain added, “Rate reductions began in November 2017 and this exercise should be prospective and restricted to consumer complaints. If authorities start reaching out, and if it becomes part of audit and assessment procedure, then it might be a concern for the industry.”
