Section 171 requires suppliers to pass on to customers, by lower prices, any reduction in GST rates or any benefit of input tax credit. The enforcement machinery has changed several times, and since 01.04.2025 no new complaints are accepted, though the obligation remains on the statute book.
Key points
- Under section 171(1) of the CGST Act, 2017 any reduction in the rate of tax on a supply, or the benefit of input tax credit, must be passed on to the recipient by a commensurate reduction in price.
- Examination was entrusted to the National Anti-Profiteering Authority, then from 01.12.2022 to the Competition Commission of India, and from 01.10.2024 to the Principal Bench of the GST Appellate Tribunal (Explanation 2 to section 171(2); section 109(5)).
- By Notification 19/2024-Central Tax, no request for examination is accepted after 01.04.2025 (proviso to section 171(2)); pending cases continue.
- A person found to have profiteered must reduce prices or return the amount with interest, and is liable to a penalty of 10% of the profiteered amount unless it is deposited within thirty days (section 171(3A), from 01.01.2020).
- In Reckitt Benckiser India v Union of India (29.01.2024) the Delhi High Court upheld section 171 and the anti-profiteering rules, while leaving individual orders open to challenge for arbitrariness or errors of method.
The provisions
171(1)–(3)Obligation to pass on benefits; the Authority
Statutory text
(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.
2[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.
Explanation1.––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.
Explanation 2.––For the purposes of this section, the expression “Authority” shall include the “Appellate Tribunal]
(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.
** Kindly also refer to Notification No. 65/2020 – CT dated 1st Sept., 2020 and Notification No. 91/2020 – CT dated 14th Dec., 2020 (w.e.f. 01.12.2020).
2. Inserted by section 148 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.
- Rules 122–137, CGST Rules
- Notification 19/2024-Central Tax — sunset date 01.04.2025
171(3A)Penalty for profiteering
Statutory text
1[(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.-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]
1. Inserted by s.112 of The Finance (No. 2) Act, 2019 (No. 23 of 2019) - Brought into force w.e.f. 01st January, 2020 vide Notification No. 1/2020-C.T., dated 1-1-2020.
What it means
The penalty applies only to profiteering after 01.01.2020, when sub-section (3A) came into force; earlier, penalty under section 122 was imposed, which High Courts questioned for want of a specific provision.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Is GST anti-profiteering still in force?
- The obligation in section 171 of the CGST Act remains, but no new requests for examination are accepted after 01.04.2025 (Notification 19/2024-Central Tax); pending cases are decided by the GSTAT Principal Bench.
- Has the anti-profiteering provision been upheld?
- Yes, by the Delhi High Court in Reckitt Benckiser India v Union of India (29.01.2024); individual orders may still be challenged.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
Rules 122 to 137 provide the procedure: complaints, investigation by the Director General of Anti-profiteering, and orders requiring price reduction, refund to recipients, or deposit in the Consumer Welfare Fund where recipients cannot be identified. The methodology for computing profiteering — what is "commensurate" — was at the heart of much of the litigation.