Chapter XXI - Miscellaneous
Section 171
Section 171: Anti-profiteering measure
A GST rate cut or input-tax-credit benefit must reach the recipient through a commensurate price reduction; the examination process depends on current notified arrangements.
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This article is for general information. Refer to the Central Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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”.
Key takeaways
Passing on the benefit
Subsection (1) requires the supplier to pass on a tax-rate reduction or input-tax-credit benefit through a commensurate price reduction.
Examination route
The Government may notify an Authority or empower an existing one. The 2024 proviso lets it notify a date after which new written requests for examination are not accepted; the applicable notification must be checked.
Penalty and timely deposit
If an examination finds profiteering, subsection (3A) sets a penalty of ten per cent of the profiteered amount, waived if that amount is deposited within thirty days of the order.
Passing on the benefit
Subsection (1) requires the supplier to pass on a tax-rate reduction or input-tax-credit benefit through a commensurate price reduction.
Examination route
The Government may notify an Authority or empower an existing one. The 2024 proviso lets it notify a date after which new written requests for examination are not accepted; the applicable notification must be checked.
Penalty and timely deposit
If an examination finds profiteering, subsection (3A) sets a penalty of ten per cent of the profiteered amount, waived if that amount is deposited within thirty days of the order.
Practical checklist
Do
- Keep pre-change and post-change price, tax-rate and input-credit working papers.
- Identify the governing notification and procedural Rules before pursuing a new examination request.
- If an order is made, separately check the amount and thirty-day deposit window.
Frequently asked questions
Does Section 171 itself identify today’s filing forum for a new request?
No. The current notified authority, any cutoff date and procedure must be checked separately.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026