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E-commerce companies to face tax audit
Why in the news ?
- The major e-commerce companies like Flipcart, Amazon and Snapdeal, are to face the audit to find out whether they have refunded the excess GST collected from the consumers.
- The anti-profiteering authority has passed the order in this regard.
More on news
- The problem surfaced as the GST rate was higher when the order was placed and was subsequently reduced when the delivery of product was made to the consumer.
- As per the order passed by the National Anti Profiteering Authority in the Flipkart case, the Director General of Audit of the Central Board of Indirect Taxes and Customs (CBIC) will conduct audit of all major e-platform companies and submit its findings to the authority.
- There may be several cases in which the e-platforms had collected excess GST from the buyers and have not refunded the same after the tax was reduced on various products on November 15, 2017.
- The GST Council, chaired by Union Finance Minister, had reduced tax rates on over 200 daily use items like chocolates, waffles, furniture, wristwatch, cutlery items, suitcase and ceramic tiles, with effect from November 15, last year.
- The authority, however, dismissed the application alleging profiteering by Flipkart filed by an individual after the e-commerce assured that it has initiated the process of refund of excess duty paid at the time of booking.
What is Profiteering ?
- Profiteering means unfair profit realized by traders by manipulating prices, tax rate adjustment etc.
- In the context of the newly launched GST, profiteering means that traders are not reducing the prices of the commodities when the GST Council reduces the tax rates of commodities and services.
- Conventionally, several traders will have a strong tendency to quickly increase the price of a commodity whose tax rate has been increased. But on the opposite side, they may delay the price reduction of a commodity whose tax rate has been cut by the government.
- A delayed or postponed price reduction helps business firms to make higher profit. The losers here are the consumers.
National Anti-Profiteering Authority (NAA)
- The anti-profiteering authority was set up last year to ensure that consumers get the benefit of tax rate reduction post the rollout of Goods and Services Tax (GST) from July 1, 2017.
- The Authority’s main function is to ensure that traders are not realizing unfair profit by charging high price from the consumers in the name of GST.
- The Authority’s core function is to ensure that the benefits of the reduction in GST rates on goods or services made by the GST Council is passed on to the ultimate consumers by way of a reduction in prices by traders.
Source
Indian Express, Indian Economy