The GST Council on Friday extended the tenure of the anti-profiteering authority by two years and approved a penalty of up to 10 per cent on entities that fail to pass on the benefits of the GST rate cuts to consumers.

It also allowed the use of Aadhaar as proof to get GST registration, while referring a proposed tax cut on electric vehicles and their chargers to an officers’ committee.

The date for filing the annual GST returns for 2017-18 was extended by two months till August 30, 2019.

Finance minister Nirmala Sitharaman told reporters after the 35th meeting of the council that they have cleared a set of rules to check tax evasion.

“To ensure that GST rate cuts are passed on to customers and no profiteering takes place, the current provision is that a penalty of Rs 25,000 will be imposed in addition to the profiteered amount.

“Under the changed rules, if the profiteered amount is not deposited within 30 days, a penalty to the extent of 10 per cent of the profiteered amount will be imposed on the company,” revenue secretary Ajay Bhushan Pandey said.

This is in addition to the requirement of returning the profiteered amount either to the consumer or to the consumer welfare funds set up by the government.

Usually, companies cite higher input costs to increase the price to the extent the tax rate cut warranted a price reduction. This has led to a series of litigation already.

M.S. Mani, partner of Deloitte India, said: “The extension of the tenure of the National Anti-Profiteering Authority (NAA) till November 2021 indicates that it would take more time to decide ongoing and new cases. However, the imposition of a penalty would be hard on businesses.”

The government had set up the NAA for two years to deal with complaints by consumers. The NAA, which came into existence on November 30, 2017, has passed 67 orders in various cases.

“One would expect framing of rules and guidance from the government as to what constitutes profiteering. This is imperative to reduce potential interpretational disputes,” R. Muralidharan, senior director of Deloitte India, said.

On the decision to allow the use of Aadhaar to register with GST-Network, Pratik Jain, partner & leader (indirect tax) of PwC India, said: “The decision to use Aadhar is a significant step and could lead to similar linkages with income tax as well in times to come.”

Return deadline

The council also extended the deadline to file the annual GST return for 2017-18 by two months till the end of August. The earlier date was June 30, Pandey said, adding the one-form new GST return filing system will be applicable from January 1, 2020.

Abhishek Jain, tax partner at EY India, said: “The extension of two months for annual return and audit were much sought for by the industry and its approval comes as a big relief. Other in-principle approvals of e-ticketing and electronic invoicing should also help to check tax evasion.”

Meet with states

Sitharaman has urged states to co-operate with the Centre by following the growth goals set by it and asserted that no goals could be achieved unless the states and the Centre worked in cohesion.

“No goals can be achieved if states and the Centre don’t work together in cohesion... The Centre has the responsibility of setting the direction of the economic growth, while it’s the responsibility of the states to implement it on the field,” Sitharaman said at a pre-budget meet with state finance ministers.

The minister sought the cooperation of all states and union territories to achieve the aspirations of the people while assuring them of her full support.