Good explanation of profiteering...

Since the goods and services tax (GST) was introduced in India, the GST Council has reduced tax rates on many items over time to make sure the household costs of consumers come down. In different discussions on LocalCircles, which hosts an anti-profiteering online community for National Anti-profiteering Authority (NAA), several consumers have been reporting that even after the GST rate reduction, many manufacturers as well as retailers have not been passing on the benefits. For instance, though GST rates on regular household items like shampoos, cosmetics, groceries, etc. were reduced from 28% to 18% in November 2017, only 27% consumers confirmed in the January 2019 LocalCircles survey that they have actually seen maximum retail prices (MRPs) being revised downwards. Similarly, for items like appliances, fragrances, paints, etc., where GST rates were reduced in July 2018, only 26% consumers have confirmed experiencing lower MRPs while 38% confirmed that MRPs had not been reduced, 36% didn’t know or did not have a need to buy such items.
Now, consumers can easily submit a complaint with evidence of old and new MRPs to outline instances of profiteering. It can be an invoice, a screenshot of product listing with MRP from an e-commerce site or a picture of the actual product. In cases of restaurants, one can submit invoices or even pictures of the old and new menu cards, which many times have a date on them. Once the complaint is received via the anti-profiteering online community or the NAA complaint form, it is forwarded to the Standing Committee within 24 hours and is taken for evaluation. The entire process of evaluation, investigation, hearing and order currently takes anywhere between 9-12 months from the time a complaint is registered.
Based on complaints received, it is apparent that majority of the brands have not tended to revise MRPs on existing stocks at their warehouse and at the distributor or retailer level so till these stocks are depleted, the consumers don’t actually experience the benefit. Same is the case with e-commerce, where in many cases, the sellers are still listing products with the old and higher MRPs. When a consumer submits a complaint, not only is that particular SKU (stock keeping unit) questioned but many times the entire product category is evaluated for profiteering.

What is required here is that the manufacturers or the brands take a proactive approach to passing on GST benefits and a supply chain communication mechanism is implemented which is electronic and fast, so different players in the chain know the price revision by SKU and understand that these benefits are to be passed now, rather than when they get the new stock with updated MRPs. In some cases, the brands may even have to issue credit vouchers to retailers to compensate them for selling the stock at a lower price than the MRP.
The math of profiteering is rather simple, where once a GST rate is reduced, the base price for an item is calculated from the old MRP and the new GST rate is applied to the base price to derive the expected MRP. The difference between the brand’s new MRP and the expected MRP is what classifies as profiteering.

https://www.livemint.com/politics/policy/brands-must-take-a-proactive-approach-to-pass-on-gst-benefits-1551808808899.html more  

View all 16 comments Below 16 comments
Could not find a proper forum. Also since you claim to be in consumer protection this topic should interest you more  
Most of the time business man reluctant to reduce the price. Who want to cut their profit. more  
Law implementation wing must look in to the matter and act accordingly. more  
This article is not written by Sanjana but Founder of LocalCircles. more  
Tnq for the post. more  
Post a Comment

Related Posts

    • Maruti acts after our circle post

      After announcing they wont reduce discount Maruti announces Rs 5k cut in car prices to pass on benefit of reduced corporate taxes but only on select models : Alto, Celerio, ignis & diesel varia...

      By Anil Mehta
      /
    • Auto Companies Profiteering

      All auto companies are saying they will not pass benefit of tax cuts to consumer. this is just terrible. Isnt this straight profiteering? Hows this different from govt reducing gst and t...

      By Varun Bhawnani
      /
    • New GST rate reductions

      A uniform GST rate of 12 % will be levied on woven/non-woven polyethylene bags GST council cuts tax rates on job work in diamond industry to 1.5% from 5% In a major boost to gems and jewe...

      By Anil Mehta
      /
    • Tax cuts - corporates must reduce prices

      The attached tells u how much they can. All fmcgs can reduce price between 0.5% -3% Remains to be seen if they profiteer or pass on.

      By Sudesh Rai
      /
    • Complaint to GST online...

      How to submit online complaint to GST authorities for supplier not remitting GST and we cannot get ITC. Please suggest way out...

      By Vadiraj Bilgi
      /
    • Multiplexes getting booked for profiteering

      Seems like our complaints are leading to good actions. apparently NY Cinemas, PVR Cinemas and the Prasads Multiplex chains are all being investigated for profiteering for not passing gst benefits t...

      By Sridhar Mohan
      /
    • GST Rates Reduction and Profiteering Complaints

      GST law requires suppliers of goods and services to pass on any reduction in the rate of tax or the benefit of input tax credit by way of commensurate reduction in prices. If this is not done, a c...

      By National Anti Profiteering Authority (NAA)
      /
    • PVR cinepolis profiteering big time

      Everyone should report profiteering by multiplexes if observed. Find an old ticket of 2018 and one of 2019 PVR Cinemas and Cinepolis theatres are under the scanner of the anti-profiteeri...

      By Garima Sharma
      /
    • Haier profiteering

      Didnt the Govt of India change gst rates from 28% to 18% for refrigerators? Funny that brands like haier even 13 months after rate reduction maintain their mrp at 65000 NAA ki...

      By Garima Sharma
      /
    • Profiteering complaint must be extended to other products

      Folks of anti profiteering circle, please help me here. I have shared so many complaints about brands. And multiple for some brands. Chances are if a brand is profiteering and deciding not to pass ...

      By Garima Sharma
      /
    • Book PVR for profiteering

      If I am not mistaken earlier there was high entertainment tax. Now Gst is only 18% but ticket prices have not seen any reductions. I urge all members to share an ecopy of any tickets pu...

      By Rajesh Suri
      /
Share To
Enter your email & mobile number and we will send you the instructions

Note - The email can sometime gets delivered to the spam folder, so the instruction will be send to your mobile as well

Please select a Circle that you want people to invite to.
Invite to
(Maximum 500 email ids allowed.)