The government could consider an anti-profiteering clause to ensure the benefits of the goods and services tax (GST) are passed on to consumers and prices don't spike once the levy is rolled out, Finance Minister Arun Jaitley said. The matter will have to be discussed in the GST Council if it comes up as a subject for debate, he said. "We are still far from that kind of thinking," Jaitley told reporters on Thursday, a day after the Rajya Sabha approved the constitutional amendment that will pave the way for GST.

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Government may consider anti-profiteering clause to ensure benefits of GST reach
consumers
The government could consider an anti-profiteering clause to ensure the benefits of the goods
and services tax (GST) are passed on to consumers and prices don't spike once the levy is rolled
out, Finance Minister Arun Jaitley said. The matter will have to be discussed in the GST Council
if it comes up as a subject for debate, he said.
"We are still far from that kind of thinking," Jaitley told reporters on Thursday, a day after the
Rajya Sabha approved the constitutional amendment that will pave the way for GST.
eTailing India Thought Corner
Impact of GST on E-commerce
Keeping in mind the anti-profiteering clause, the panel headed by Subramanian had proposed the
revenue neutral rate at 15-15.5% and the standard rate at 17-19%. However several states have
suggested GST rate to be over 20% to minimize revenue losses as compared to the proposed 17-
19%.
The states’ argument supporting their case is that they will require higher revenue for
development which higher GST rate can bring in. Meanwhile, the centre assures full
compensation for the next five years for any revenue loss. The centre will need to keep in mind
its annual budget spend on health and education sectors as well as fiscal deficit while allocating
money to the states.

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Coming back to e-commerce industry, there is a dedicated chapter on e-commerce transactions in
the Model GST Law. The proposed Model GST Law may result in higher compliance challenges
and will require further clarity and certainty.
 The Chapter in GST law separates an 'electronic commerce operator' and an ‘aggregator’.
Well it could be argued that an aggregator could be covered under the definition of
'electronic commerce operator'. The only distinction between them is that an aggregator
provides services under its brand name. Following it, the aggregator would be required to
collect tax at its source.
 Again online retailers who supply goods/services on their own behalf are not covered
under the definition of electronic commerce operator. Hence the process of tax collection
at source and other compliances in the Chapter will not be applicable.
 Electronic commerce operators engaged in operating or managing online platforms or
websites through which supply of goods/services are facilitated, would be required to
collect tax at source (out of the total amount payable to the supplier), and deposit the
same with the government. Such tax collection at source (TCS) is to be made at the time
of credit of the amount payable to the account of the supplier or at the time of payment to
the supplier, in cash or any other mode (whichever is earlier).
 Despite the availability of tax exemption to small service providers (based on their
turnover), it appears that GST will still need to be collected at source by e-commerce
operators from small suppliers, even when their turnover does not exceed the threshold
exemption. There is ambiguity in whether refund of tax paid would thereafter be
available to small suppliers.
 For e-services, the tax would go to the state where the registered address of the customer
of the subscription is based, according to the records of the e-commerce player for a B2C
services. “With the concept being ‘destination-based consumption tax, the e-tailers need
to adopt a new business model,” Sreedhar Prasad, partner — e-commerce, KPMG, in
India.
 Intra-state and inter-state stock transfers, between branches or warehouses of a single e-
commerce entity, would be deemed to be supplies, subject to GST. Though the tax paid
would be available as credit to the entity and may result in cash flow blockages. For
instance where large quantities of goods are stock transferred, tax liability would arise at
this first stage which can only be offset at the time of final supplies by the e-commerce
entity.
 Under the Model GST Law, the 'transaction value' is taken as the value of goods/services.
Whether discounts get included in the 'transaction value' depends on the category they
fall in. Discounts under the Model GST Law have been categorized under two sections:
 Pre-supply discounts: Discounts allowed before or at the time of supply, which are
permitted in the normal course of trade practice and reflected in invoices, will not form
part of the 'transaction value'.
 Post-supply discounts: Discounts given after effecting supply are included in the
'transaction value' only in cases where such post-sale discount, as per agreement, is
known at or before the time of supply, and specifically linked to relevant invoices.

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So these are the key pointers to be clarified and if possible amended on the GST bill with respect
to an e-commerce entity. Again removal of cascading taxes and consolidating tax rates is a
welcome move on the GST mandate.