what is the Anti-profiteering under Gst ?
please explain with example.
Any reduction in rate of tax on any supply of goods or services or benefit of input tax credit shall be passed on to recipient by way of proportionate reduction in Final Price of the goods or services.
eg:
Gujarat Pipe Dealer is selling pipes in Gujarat, he is registered under Gujarat VAT laws. He has purchased these pipes from manufacturer where on pipes Excise Duty was levied.
In existing laws, Excise duty levied by manufacturer to dealer is the cost while selling the pipes.
But under GST transitional provisions, the dealer can avail ITC benefits on those excise duty levied pipes and the reduction in such cost need to be passed on to customer.
In Rs
Purchased Pipe from manufacturer 1,00,000
Excise duty levied @ 12.5% 12,500
Total 1,12,500
VAT levied @ 5% 5, 625
Total Cost to Dealer 1,18,125
When dealer is selling this pipes to its customer ( under existing laws)
Cost of pipe( VAT ITC will be available to him) 1,12,500
Profit of approx. 7% 7,875
Final Cost 1,20, 375
Vat @ 5% 6,019
Final Cost to Customer 1,26,394
When dealer is selling this pipes to its customer ( under GST )
Cost of pipe( VAT & Excise ITC will be available to him) 1,00,000
Profit of approx. 7% 7,000
Final Cost 1,07,000
GST lets say @ 5% 5,350
Final Cost to Customer 1,12,350
There has been reduction in cost of pipe due to ITC.
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