Explainer: Why govt disbanded the NAA and why GST 2.0 may revive it
New Delhi, Aug 20, 2025
The Centre is considering reviving anti-profiteering provisions for two years to ensure consumers benefit from GST rate cuts
The government is considering reviving anti-profiteering provisions for a limited two-year period as part of the transition to a restructured Goods and Services Tax (GST), widely referred to as GST 2.0. The move is aimed at ensuring that businesses pass on tax cuts to consumers, rather than absorbing the gains.
The move signals a possible comeback of a regulatory framework that was dissolved in 2022 and integrated with the Competition Commission of India (CCI).
What was the National Anti-Profiteering Authority (NAA), and why does India need a dedicated mechanism to police profiteering under GST 2.0?
What is anti-profiteering activity?
Under the GST law, any reduction in tax rate or gain from input tax credit (ITC) must be passed on to consumers through a commensurate cut in prices. Failure to do so constitutes “profiteering”.
The provision was designed to prevent companies from pocketing benefits from GST rationalisation instead of transferring them to consumers.
What was the NAA?
When GST was rolled out in July 2017, the government introduced an 'anti-profiteering' clause under Section 171 of the Central GST Act.
To implement this, the NAA was set up in November 2017. It worked alongside the Directorate General of Anti-Profiteering (DGAP), which investigated complaints.
Initially focused on maximum retail prices, the framework soon expanded to cover successive rate cuts and ITC benefits across sectors such as FMCG, hospitality, and real estate.
Why was NAA disbanded?
The NAA was dissolved in December 2022, and its functions were transferred to the CCI. The reasoning was administrative efficiency—since CCI already handled issues of unfair market practices, it was thought capable of managing profiteering disputes as well.
But structural gaps soon emerged.
The merger exposed a fundamental mismatch in the function of the NAA and the CCI, which deals with cartels, monopolies, and abuse of dominance, not tax compliance.
By mid-2024, CCI reported that anti-profiteering was “not its core function” and told the GST Council that tax authorities should oversee such matters.
Between December 2022 and June 2024, the CCI closed only 27 cases, while nearly 140 remained pending, with a further 184 disputes stuck in High Courts involving major firms such as Hindustan Unilever, Jubilant Foodworks, Patanjali, Reckitt Benckiser, and Procter & Gamble.
GST Appellate Tribunal takes up anti-profiteering cases
The GST Council accepted the CCI's reasoning and temporarily shifted oversight to the newly constituted GST Appellate Tribunal (GSTAT) Principal Bench in Delhi from October 2024.
A sunset clause set April 1, 2025, as the deadline for filing fresh profiteering complaints, though ongoing cases would continue.
India to introduce new GST slabs
The government has recently proposed to reduce the current four slabs to just two main ones:
5 per cent Standard Rate for essentials and daily-use goods
18 per cent Merit Rate for most other goods and services
The 28 per cent slab will be eliminated, while a new 40 per cent rate will apply only to sin and luxury goods.
Does India need a dedicated system to monitor anti-profiteering?
As plans to overhaul GST rates are underway, with rationalised and potentially lower slabs expected, the government needs to ensure that consumers directly benefit.
Presently, only competitive pressure is expected to push prices down—a mechanism experts argue may be insufficient, as earlier reported by Business Standard.
Backlog on cases shows that without a dedicated body, enforcement weakens, and companies may feel less pressure to comply.
The NAA or a similar dedicated body may be needed because GST 2.0 involves large rate changes, and profiteering is a tax compliance issue.
What's next?
The GST Appellate Tribunal continues to hear ongoing cases. The challenge now lies in striking a balance between creating a credible deterrent against profiteering while avoiding excessive regulatory burdens and prolonged litigation for businesses.
Timeline of anti-profiteering in India
July 1, 2017: GST Act comes into effect
November 28, 2017: NAA established
December 1, 2022: NAA dissolved; oversight shifted to CCI
October 1, 2024: GSTAT begins hearing profiteering disputes
April 1, 2025: Sunset date for new profiteering complaints
[The Business Standard]
