Anti-Profiteering (Section 171): Definition, Meaning & Guide for Indian Businesses

Section 171 of the CGST Act requires businesses to pass on every reduction in tax rate or every additional ITC benefit to customers via lower prices. Failure to comply attracts penalty.

What is Anti-Profiteering (Section 171)?

Anti-profiteering provisions in Section 171 of the CGST Act prevent businesses from pocketing GST rate cuts or extra ITC benefits. If GST on your product drops from 18% to 12%, you must reduce price by the corresponding 6%. The National Anti-Profiteering Authority (NAA) — now subsumed into the Competition Commission of India — investigates complaints. Penalty: equal to the amount profiteered + 18% interest. Most NAA cases have come from real estate, FMCG and restaurants. Keep documentation showing how every rate change flowed through to customer pricing.