ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Price Monitoring and Control under GST

Lessons from Australia

The Central Goods and Services Tax Act, 2017 has an “anti-profiteering” clause aimed at ensuring that businesses pass on tax rate cuts and cost savings resulting from the adoption of GST to the consumers. In this context, Australia’s experience with price monitoring and control during the GST transition period is looked at to draw lessons for India. It is eminently possible to institute a comprehensive and effective price monitoring and control mechanism in India to enable benefits to consumers under the GST regime. However, the anti-profiteering rules in their present form have some lacunae and may not produce the desired results of containing profits and, thereby, price rise.

An issue that has gained attention in the context of implementation of the Goods and Services Tax (GST) is the impact of the tax on prices of goods and services. In fact, concerns about the inflationary impact of value added tax (VAT), a variant of GST, was a characteristic feature of the switchover to this tax in almost all countries (Tait 1988). As a result, both in the run-up to and in the aftermath of the introduction of VAT, most countries have adopted extraordinary interventionist policies not only to limit price revision, but also to prevent any unjustified increase in prices by the businesses.

Some of the important price intervention measures implemented across the world are (i) price freeze or control (in Belgium, Netherlands and Korea); (ii) price monitoring (in Germany and Ireland); (iii) freeze on profit margins (in Netherlands and Ireland), (iv) publicity campaign (in Korea, New Zealand, and United Kingdom); (v) enactment of counter inflation laws (in United Kingdom); and (vi) reduction of other taxes and subsidy payments to essential commodities (in Denmark) (Tait 1988).

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Published On : 20th Jan, 2024

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