Section 171 - Anti-profiteering measure
Chapter XXI - Miscellaneous
ACTIVEOFFICIAL_TEXT_CAPTUREDindex,follow
Source control: The text/status on this page is tied to the official source gateway and the Phase 1 legal-review register. Open official source.
Finin2min Summary - Section in 2 Minutes
Requires rate reductions and ITC benefits to be passed through by commensurate price reduction. Current institutional and filing cut-offs must be read with the 2024 notifications.
Exact operative text
171. Anti-profiteering measure.-(1) Any reduction in rate of tax on any supply of goods or
services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate
reduction in prices.
(2) The Central Government may, on recommendations of the Council, by notification, constitute an
Authority, or empower an existing Authority constituted under any law for the time being in force, to
examine whether input tax credits availed by any registered person or the reduction in the tax rate have
actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.
[Provided that the Government may by notification, on the recommendations of the Council, specify
the date from which the said Authority shall not accept any request for examination as to whether input
tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a
commensurate reduction in the price of the goods or services or both supplied by him.
Explanation.-For the purposes of this sub-section, "request for examination" shall mean the written
application filed by an applicant requesting for examination as to whether input tax credits availed by any
registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the
price of the goods or services or both supplied by him.]
(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such
functions as may be prescribed.
[(3A) Where the Authority referred to in sub-section (2), after holding examination as required under
the said sub-section comes to the conclusion that any registered person has profiteered under
sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the amount so
profiteered:
Provided that no penalty shall be leviable if the profiteered amount is deposited within thirty days of
the date of passing of the order by the Authority.
Explanation. [1]-For the purposes of this section, the expression "profiteered" shall mean the
amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or
services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the
price of the goods or services or both.]
[Explanation 2.-For the purposes of this section, the expression "Authority" shall include the
"Appellate Tribunal".]
Paragraph-wise decode
Requires rate reductions and ITC benefits to be passed through by commensurate price reduction. Current institutional and filing cut-offs must be read with the 2024 notifications.
Section-Rule-Form-Notification bridge
No direct Rule certified in Phase 1. Check notifications, circulars, forms and corresponding State law.
The mapping is a legal concordance, not a round-robin related-link list. It is limited to instruments certified in this phase.
Practical example
A tax rate falls but the supplier retains the entire benefit through unchanged base price. The commensurate-price question is examined for the legally open period and forum.
Professional alert
Institutional transition matters: GSTAT Principal Bench handles the transferred function from 1 October 2024, and no new anti-profiteering request is accepted from 1 April 2025.
Implementation checklist
- Fix the transaction, taxable period and jurisdiction.
- Read every subsection, proviso, explanation and omission marker.
- Open the mapped Rule, form, notification and circular.
- Test State/UT variation and portal version.
- Preserve evidence, approvals, working papers and acknowledgements.
- Record the conclusion, assumptions, source date and reviewer.
Evidence and retention checklist
- Contract, purchase order, invoice or underlying transaction document.
- Registration, return, ledger, challan and portal acknowledgement.
- Official Act/Rule/notification version used and effective date.
- Internal tax position paper, computation and management approval.
- Correspondence, notices, replies, orders and appeal papers where applicable.
Practical Q&A
- What does section 171 regulate?
- It regulates anti-profiteering measure. Read the exact text, conditions, exceptions and transaction date together.
- Which subordinate law should be checked?
- No direct CGST Rule has been certified in this phase. Notifications, circulars, forms and the corresponding SGST/UTGST layer may also apply.
- What evidence should be retained?
- Preserve the contract or transaction record, invoice or form, portal acknowledgement, payment/ledger evidence, correspondence, legal working and the official source version used.
- Can portal behaviour override the statute?
- No. Portal functionality is operational evidence; legal entitlement and liability remain controlled by the Act, Rules, notifications and binding decisions.