TOPIC : GS 2
‘Ensure GST cuts reach users’- Anti-Profiteering
What is Profiteering?
- Any reduction in rate of tax or the benefit of input tax credit should be passed on to the consumer by way of commensurate reduction in prices.
- It has been seen that when the GST rates are cut, the firms do not pass on this benefit to the consumers by reducing the prices and instead continue to make higher profits.
- There is a need for an institutional mechanism to ensure that the firms do not earn such profits illegally and benefits of the GST get passed on to the consumers.
About National Anti-Profiteering Authority
- Section 171 of the CGST act deals with profiteering.
- It empowers the central Government to constitute authority to check illegal profiteering.
- Accordingly, the Union Cabinet has constituted National Anti-Profiteering Authority in 2017.
- The NAA is headed by a senior officer of the level of Secretary to the Government of India and comprises of four Technical Members from the Centre and the States.
- The tenure of National Anti-profiteering Authority (NAA) was due to end by 30 November 2019. However, the GST Council has further extended its tenure by two years.
Mechanism of Working
- It certify that there is anti-profiteering in a specific case, it can order the concerned firm to reduce its prices or return the undue benefit availed by it along with interest to the recipient of the goods or services.
- If the undue benefit cannot be passed on to the consumer, it can be ordered to be deposited in the Consumer Welfare Fund.
- In extreme cases, the NAA can impose a penalty on the defaulting business entity and even order the cancellation of its registration under GST.
Problems with the Present Anti-Profiteering Framework
- Absence of Methodology to ascertain Profiteering: Rule 126 of the Central Goods and Services Tax Rules, 2017, mandates that National Anti-profiteering Authority (NAA) must evolve a methodology to deal with anti-profiteering issues.
- The NAA has failed to prescribe the methodology leading to arbitrariness and contradictions in Anti-
Profiteering Framework.
- Only Mode prescribed for passing on the Benefit: Present, the companies are compulsorily required to reduce the prices of their products whenever the GST rates are reduced.
- If the companies use any other method to pass on the benefit of reduced GST rates, it still is considered as Profiteering.
Example, the companies can decide to pass on the benefit in the form of increased grammage i.e. providing higher quantity of commodity at the same price.
- Other Factors not considered: In spite of reduction in the GST rates, the cost of manufacturing of commodities (Raw materials, Labour Cost etc) may have been increased. However, these factors are not taken into account to ascertain profiteering.
- Absence of Appellate Body: There is no appellate mechanism or authority prescribed against the order of National Anti- profiteering Authority (NAA). Thus, only remedy for a person dissatisfied with the NAA order is to approach the High Court through Writ Petition
Mains question
Discuss the NAA composition . Explain the benefits and cons of the system
Sources : https://www.thehindu.com/business/ensure-gst-cuts-reach-users/article34954101.ece
PRELIMS PUNCHERS
- Permafrost
It is any ground that remains completely frozen32°F (0°C) or colder for at least two years straight. These permanently frozen grounds are most common in regions with high mountains and in Earth’s higher latitudes near the North and South Poles.
It is made of a combination of soil, rocks and sand that are held together by ice. The soil and ice in permafrost stay frozen all year long. Near the surface, permafrost soils also contain large quantities of organic carbon a material leftover from dead plants that couldn’t decompose, or rot away, due to the cold. Lower permafrost layers contain soils made mostly of minerals. A layer of soil on top of permafrost does not stay frozen all year. This layer, called the active layer, thaws during the warm summer months and freezes again in the fall. In colder regions, the ground rarely thaws even in the summer. There, the active layer is very thin only 4 to 6 inches . In warmer permafrost regions, the active layer can be several meters thick.
- Central Bank Digital Currency
It uses an electronic record or digital token to represent the virtual form of a fiat currency of a particular nation or region.
A CBDC is centralized it is issued and regulated by the competent monetary authority of the country.
There has been growing interest in cryptocurrencies like Bitcoin and Ethereum, which work on a distributed ledger technology known as the blockchain network. Such virtual currencies have gained immense popularity, owing to their decentralized and regulation-free nature; with some seeing their rise as a possible threat to the traditional banking system that operates under the purview and control of a country’s regulatory authority, such as a central bank. RBI announced that it will begin testing its own digital currency. It is the legal tender issued by a central bank in a digital form”. Virtual money, backed and issued by a central bank. Distinct from private virtual/digital currencies – as they are decentralised but CBDCs are centralised. First CBDC launched by Bahamas Bahamian Sand Dollar.
- National Film Archive of India
The National Film Archive of India (NFA) was established as a media unit of the Ministry of Information and Broadcasting in February 1964. It is a member of the International Federation of Film Archives.
NFAI’s activities relating to dissemination of film culture are manifold. Its Distribution Library has about 25 active members throughout the country and it also organises joint screening programmes on weekly, fortnightly and monthly basis in six important centres. It has over 10,000 films, over 10,000 books, over 10,000 film scripts, and over 50,000 photographs. Another important programme is the film teaching scheme comprising long and short term Film Appreciation courses conducted in collaboration with the Film and Television Institute of India (FTII) and other educational and cultural institutions. At the International level, NFAI supplied several Indian classics for major screening programmes.
- The Council of Scientific and Industrial Research
It was established by the Government of India in September 1942 as an autonomous body that has emerged as the largest research and development organisation in India. The research and development activities of CSIR include aerospace engineering, structural engineering, ocean sciences, life sciences, metallurgy, chemicals, mining, food, petroleum, leather, and environmental science.
Although it is mainly funded by the Ministry of Science and Technology, it operates as an autonomous body through the Societies Registration Act, 1860. CSIR was awarded the National Intellectual Property (IP) Award 2018 in the category “Top R&D Institution / Organisation for Patents and Commercialization” by Indian Patent Office.
PRELIMS QUESTIONS
- Consider the following statement with regard to Permafrost
- It remains completely frozen32°F or colder for at least Five years straight.
- It is made of a combination of soil, rocks and sand that are held together by ice.
Select the correct statement using code given below.
(a). 1only (b) 2 only
(c).Both (d). None of above
Answer: B
It is any ground that remains completely frozen32°F (0°C) or colder for at least two years straight. These permanently frozen grounds are most common in regions with high mountains and in Earth’s higher latitudes near the North and South Poles.
It is made of a combination of soil, rocks and sand that are held together by ice. The soil and ice in permafrost stay frozen all year long. Near the surface, permafrost soils also contain large quantities of organic carbon a material leftover from dead plants that couldn’t decompose, or rot away, due to the cold. Lower permafrost layers contain soils made mostly of minerals. A layer of soil on top of permafrost does not stay frozen all year. This layer, called the active layer, thaws during the warm summer months and freezes again in the fall. In colder regions, the ground rarely thaws even in the summer. There, the active layer is very thin only 4 to 6 inches . In warmer permafrost regions, the active layer can be several meters thick
- Consider the following statement with regard to The Council of Scientific and Industrial Research
- It is an intergovernmental body that has emerged as the largest research and development organisation in India
- It is mainly funded by NITI Aayog
Select the correct statement using code given below.
(a). 1only (b) 2 only
(c).Both (d). None of above
Answer: D
It was established by the Government of India in September 1942 as an autonomous body that has emerged as the largest research and development organisation in India. The research and development activities of CSIR include aerospace engineering, structural engineering, ocean sciences, life sciences, metallurgy, chemicals, mining, food, petroleum, leather, and environmental science.
Although it is mainly funded by the Ministry of Science and Technology, it operates as an autonomous body through the Societies Registration Act, 1860. CSIR was awarded the National Intellectual Property (IP) Award 2018 in the category “Top R&D Institution / Organisation for Patents and Commercialization” by Indian Patent Office.