The GST anti-profiteering authority has sought inputs from telecom operator Bharti Airtel and budget airline Indigo on whether the goods and services tax (GST) or credit allowed on inputs in the new regime has created room for reduction in prices.
Taking suo-moto cognisance of the impact of GST on prices in telecom and aviation sector, the National Anti-Profiteering Authority (NAA) has asked market leaders in the sectors to calculate the input tax credit (ITC) benefits that have accrued to them and whether it was enough to pass them 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 post GST, the source said “there may not be enough room for passing on the benefits, but the NAA is seeking calculation from market leaders to assesses industry wide impact”.
When reached for comment, Indigo spokesperson said, “The benefits of the GST rate reduction on tickets have been passed on to the customers by all airlines. We had a meeting with the competent authority to discuss the relevant details and have submitted the same for their review.”
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% in the GST regime, which was rolled out from July 1, 2017, from the erstwhile service tax rate of 15%, including cess.
However, in the new regime the telecom companies were allowed to claim ITC on host of inputs, which the Finance Ministry felt 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%, while that for business class at 12%, along with ITC benefits. In the erstwhile service tax regime, the tax rates were 5% and 9%, respectively.
Last year, the Finance Ministry had asked telecom companies to rejig costs and lower prices to pass on the benefits of GST to customers.
“The telecom companies are required to rework their costing and credits availability and r-jig 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 NAA 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.