Retailers likely to face an audit on GST rate cuts
The GST Council cut down the tax rates on a lot of goods which included chocolates, toothpaste, shaving creams, and a lot of products during November 2017. The rates were reduced from 28% to 18% on some products and some products were also exempted from GST.
The National Anti-profiteering authority has requested the director general of the audit to look into the proper auditing of the GST rates.
Many E-Commerce sites could be affected
E-commerce firms such as Amazon and Myntra would face an audit by their respective audit firms to check whether they have implemented the cuts in the GST rate and provided products and services at low costs to their customers.
The Goods and Services Tax was brought into force on 1st July 2017. The GST removed all the indirect taxes which were previously levied in India. It is a value-added tax and is destination-based.
The main purpose behind GST
The GST was implemented mainly to remove all the indirect taxes and replace it with one single tax. The main aim of GST is to remove the tax on tax and bring in only one set of tax that would be implemented at every stage of value addition. This envisioned that the cost of goods will go down since the tax to be paid will now become less.
But, there were some cases in which the cumulative percentage of the previous indirect tax rates were low than those of the GST rates. There were many councils held and the government decided to slash the GST rates of over 178 products in November 2017. These were received well by the citizens of India.
The government also followed this move with the formation of an anti-profiteering committee. The duty of the anti-profiteering committee was to oversee whether the companies returned the excess profit of GST back to the consumers. If they did not return it back to the consumers, they must at least deposit the excess profit from GST in an account called the ‘consumer welfare fund’.
The online retailers would face an audit whereby the accounts would be monitored to ensure whether they have implemented all the tax cuts as per the GST laws and that whether the excess profit from GST was returned to the consumers. This would keep these firms in check from earning abnormal profits in the name of GST.
Need for GST
This is a very crucial step taken by the anti-profiteering authority. There have been several complaints from the buyers of goods that extra tax was levied on them under the name of GST. This was very unfair and infuriated the buyers. But, on the other hand, there are also instances where the e-commerce frim charged a higher rate of GST when billing and reduced it when the tax rate was cut before the product reached the buyer. The difference in the tax rate was returned to the buyer.
GST is also another way of looking at how many indirect taxes were there in the pre-GST regime. There were a lot of indirect taxes there was something known as the cascading effect of the taxes wherein the consumer had to pay a tax upon a tax. The introduction of the GST saw to it that this was abolished.
GST regime might look very simple but there are a lot of things that should be accounted for when taking a decision regarding the tax laws in GST.
Under GST, it is mandatory that every company has to file its tax returns on the online GST portal. This is not only the efficient use of technology but also reduces a lot of paperwork relating to GST and it ensures that no one escapes without filing their tax returns.
