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Sunset Clause for Anti-Profiteering Measures Under GST

calendar26 Jun, 2024
timeReading Time: 4 Minutes
Sunset Clause for Anti-Profiteering

The GST Council, under the Chairmanship of the Indian Finance Minister Smt Nirmala Sitharaman, has brought a sunset clause for anti-profiteering measures that provides enormous relief to the taxpayers. During the 53rd GST Council Meeting, this decision introduced a fairly fundamental shift in the GST regulatory paths.

The anti-profiteering provisions of GST were enacted to protect consumer interest and ensure that the effect of reducing taxes is passed on to the consumers. NAA ensures that such measures are implemented and, or imposes penalties against organizations that have failed to follow instructions.

As per the recommendation of the committee, the Competition Commission of India (CCI) will not be accepting new applications regarding Anti-profiteering cases. Such cases shall be shifted towards the GST appellate Tribunal.

Understanding Anti-Profiteering Measures

Anti-profiteering measures were introduced under GST in order to ensure that businesses pass on the benefits of reduced tax rates or input tax credits to consumers. The rationale behind these measures is to prevent unreasonable profiteering by businesses at the expense of consumers and to maintain the intended benefits of GST reforms.

What is a Sunset Clause?

A sunset clause in legislation can be described as a provision where a law is given an expiry date, after which it lapses if not reaffirmed by other legislation. In relation to the anti-profiteering measures, it means that these provisions are laid down to be time-bound, wherein the laid down period will elapse and the provisions cease to apply unless renewed by another legislation.

The adoption of this clause is intended to optimize the legislation and adapt to the evolving market dynamics.

Advantages of Sunset Clause for Anti-profiteering

Some of the significant benefits of Sunset Clause for anti-profiteering are mentioned below-

  • Market-Driven Pricing:

The sunset clause for anti-profiteering enables companies to alter their prices based on costs incurred and market price trends. This leads to a more flexible price-setting approach as firms adjust to prevailing market circumstances. This shift is expected to better align pricing mechanisms with market realities, thereby minimizing the potential for disputes.

  • Reduced Compliance Burden:

This sunset clause for anti-profiteering should, in the long run, help reduce bureaucracy and cut the burden of regulations, which, in the course of streamlining businesses, also leads to cutting administrative expenses.

This sunset clause shall help in the process of reviewing and updating laws and regulations. This is because conditions in society alter and hence require updating them after a certain period of time.

  • Continued Case Resolution:

The adjustment on the sunset clause for anti-profiteering entails specific information whereby, while no new applications shall be entertained, the registered cases shall still receive consideration and determination.

In this regard, the sunset clause helps maintain the continuity of the regulation during the transitional period so as not to undermine the handling of existing problems while at the same time still having regard to regulatory efficiencies and organizational freedom.

  • Periodic Review and Adaptation:

The sunset clause for anti-profiteering is useful as it allows for its provisions to be perpetually reviewed and adjusted for any purpose. This way, the law is adapted to a changing economic environment so that it is relevant to the desired policies.

By the sunset clause, one is able to make changes and update the regulations in time with the aim of being at parity with the economy at that particular period of time.

  • Historical Context and Global Comparison

It must be noted that the sunset clause for anti-profiteering measures was triggered to guarantee that the reduction in the rates of GST or input tax credit is passed on to consumers. However, the measures aimed at the implementation of the above objectives had gone through significant challenges. Similar actions have been observed internationally.

In Australia, after the introduction of GST, the Competition and Consumer Commission was given the mandate to ensure that such benefits were passed on. The way anti-profiteering is applied in Malaysia is under the Ministry of Domestic Trade and Consumer Affairs.

Hence, there is a need to strike a balance to ensure that unreasonable profiteering does not happen. In the same manner, the sunset clause for anti-profiteering also points out the fact that such forms of regulation require constant monitoring of the market scenario.

  • Stakeholder Consultations and Feedback

Various stakeholders in the country, including policymakers, industry players, and consumers, were consulted in arriving at the decision to allow a sunset clause. These consultations were important in developing the council’s final directions, especially on how consumer protection may be enhanced alongside efforts to reduce regulatory burdens in the country.

Ensuring Clarity and Dispute Reduction

The GST Council recently introduced new regulations for determining the value of services linked to corporate guarantees among related entities, set to take effect from October 26, 2023. This initiative aims to enhance transparency and minimize conflicts in corporate guarantee transactions.

  • Evaluating Consumer Impact

The occurrence of a sunset clause leads to considering its effect, positive or negative, on consumers. To protect consumers’ interests as the GST reforms persist, concrete measures to assess consumer pricing and market practices shall be developed after the reforms are implemented. GST registration is of utmost importance for businesses.

  • Monitoring and Enforcement Mechanisms

The GST Council will create effective checks and supervision procedures against anti-profiteering measures during what is referred to as the sunset clause period. It may involve auditing, inspecting, and sanctioning in case of violation as a way of safeguarding the reforms made under GST.

  • Roadmap for Transition

Such an arrangement will ensure that proper procedures for implementing the sunset clause regime are put in place in a proper transitional method. This may entail public education and awareness or organizational capabilities to ensure compliance with the existing rules.


The implementation of a sunset clause for anti-profiteering measures under GST leaves a profound impact on the country’s regulatory approach. It was decided by the GST Council headed by Finance Minister Nirmala Sitharaman, which is expected to protect consumers while easing businesses’ steep compliance costs.

There are thus many benefits to the sunset clause, such as providing for market price, removing bureaucratic influence, and providing for a regular review of the law. The sunset clause relating to anti-profiteering measures is a well-planned move towards the dynamism of the GST segment. This means it wants to evolve in its function with the market as its initial design of safeguarding consumers from unfair, exorbitant billing.

Frequently Asked Questions

  1. What is the sunset clause for anti-profiteering measures under GST?

    The sunset clause is a provision that sets an expiry date for the anti-profiteering measures under GST. After this date, these measures will cease to apply unless renewed by new legislation.

  2. Why was the sunset clause introduced?

    The sunset clause was introduced to optimize legislation, adapt to evolving market dynamics, reduce business compliance burdens, and allow for more market-driven pricing.

  3. How does the sunset clause affect new anti-profiteering cases?

    The Competition Commission of India (CCI) will not accept new applications regarding anti-profiteering cases. New cases will be shifted to the GST Appellate Tribunal.

  4. What are the main advantages of implementing a sunset clause?

    Key advantages include allowing market-driven pricing, reducing compliance burdens for businesses, enabling periodic review and adaptation of regulations, and maintaining continuity in resolving existing cases.

  5. How will existing anti-profiteering cases be handled?

    Existing registered cases will still be considered and determined, ensuring continuity in resolving ongoing issues during the transitional period.

  6. How was the decision to implement the sunset clause made?

    The decision was made by the GST Council, chaired by Finance Minister Nirmala Sitharaman, after consultations with various stakeholders, including policymakers, industry players, and consumers.

  7. What measures will be taken to monitor the impact of the sunset clause?

    The GST Council will create monitoring and enforcement mechanisms, which may include auditing, inspecting, and sanctioning in case of violations. There will also be efforts to assess consumer pricing and market practices after implementation.

Read our article: Is It Mandatory To Get GST Registration For Startups?

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