No particular mechanism to check profiteering right now, but seized of the question: FM Nirmala Sitharaman

Nirmala Sitharaman

At the moment, there is not any particular mechanism under the GST regime to counter "profiteering" by businesses, but "I am seized of the question", Finance Minister Nirmala Sitharaman said on Friday.

"Many citizens have raised this issue (of passing GST cuts benefits to citizens). We’ll have to keep talking with industry, we’ll have to nudge them," Sitharaman told Network18 Group Editor-in-Chief Rahul Joshi in an exclusive interview.

"In the case of insurance sector, the public sector insurance companies have come forward to openly say that they will indeed pass the rate-cuts to citizens. I’m sure the private sector will do the same with insurance, and so with other things," said the FM.

On Wednesday, the 56th GST Council recommended exempting all individual health and life insurance policies from GST. Earlier, these policies were taxed at 18% with the availability of Input Tax Credit (ITC).

The Council has slashed duty on multiple items, ranging from daily use to automobiles, to an extent that now 99% of all goods and services touched by GST are now either in zero, 5%, or 18%, as stated by the FM.

On Wednesday, in a post GST-Council press-conference, Revenue Secretary Arvind Shrivastava said that since inception, under the arrangement for anti-profiteering, which is no longer in place now, only 704 cases were registered with the erstwhile National Anti-Profiteering Authority (NAA). "And 60% of the cases were initiated within the first 3-4 years of implementation. Total profiteering that was alleged was around Rs 4,362 crore in these 704 cases. So…last time, too, industry largely passed on the benefits of rate cut," Shrivastava had said.

At present, the pending anti-profiteering cases are being handled by the GST Appellate Tribunal (GSTAT), which will handle new cases too.

Earlier in 2017, the government had introduced anti-profiteering measures through adding Section 171 in CGST Act. The government had also established the National Anti-Profiteering Authority (NAA) to ensure anti-profiteering is prevented. In cases of businesses resorting to profiteering, the NAA had the powers to take actions, including imposition of penalty.

Tax experts say that while the NAA was well-intentioned in its structural design, its operational trajectory was marred by procedural delays, limited jurisprudential evolution, and a prevailing perception of being more punitive than reformative.

The NAA continued its operations till November 30, 2022. And from December 1, 2022, the NAA’s functions were transferred to the Competition Commission of India (CCI). However, in 2024, the GST Council recommended that no new cases of anti-profiteering will be accepted by the CCI starting April 1, 2025 – which effectively ended any statutory supervision on such cases.

Tax experts say the that there is a need for an anti-profiteering framework. "Currently, the GST Appellate Tribunal is handling such cases, but a dedicated authority under GST 2.0 could make the process even more effective and efficient," said Sandeep Sehgal, Partner-Tax, AKM Global.

"With recent GST rate rationalizations, having a clear, streamlined mechanism will ensure that consumers fully benefit from tax reductions, while also providing businesses with guidance and clarity on compliance," Sehgal said.