The goods and services tax anti-profiteering authority has sought inputs from telecom operator Bharti Airtel Ltd. and budget airline IndiGo on whether the GST or credit allowed on inputs in the new regime has created room for reduction in prices.
Taking suo-motu cognisance of the impact of the GST on prices in the telecom and aviation sectors, the National Anti-Profiteering Authority has asked the market leaders in the sectors to calculate the input tax credit benefits that have accrued to them and whether it was enough to pass on to end-consumers, a source told PTI.
The companies have been asked to submit the calculation within a fortnight, the source said.
With regard to the telecom sector, which saw a rise in tax incidence after the implementation of the GST, the source said there may not be enough room for passing on the benefits, but the anti-profiteering authority is seeking calculation from market leaders to assesses industry wide impact.
An Airtel spokesperson, however, said “we have not received any notice from the authorities asking for a report”.
The tax rate for telecom service providers was hiked to 18 percent in the GST regime, rolled out from July 1, 2017, from the erstwhile service tax rate of 15 percent, including cess.
However, in the new regime the telecom companies were allowed to claim input tax credit, which according to the Finance Ministry will bring down the effective incidence of the levy.
In case of airlines, the GST rates for economy-class travel has been fixed at 5 percent, while that for business class at 12 percent, along with input tax credit benefits. In the erstwhile service tax regime, the tax rates were 5 percent and 9 percent, respectively.
Last year, the Finance Ministry had asked telecom companies to rejig costs and lower prices to pass on the benefits of the GST to customers.
“The telecom companies are required to rework their costing and credits availability and rejig their prices and ensure that the increased availability of credit is passed on to the customers by lowering their costs,” the ministry had said.
The National Anti-Profiteering Authority was set up in November 2017 to ensure that the benefits of rate reduction or reduced tax incidence is passed on to the end consumers. The authority was also empowered to take suo-moto action, besides acting on complaints of profiteering. – Bloomberg Quint