Antiprofiteering measure
Section 171, CGST Act
Straight from CBIC
Official source, not a summary of a summary
Full text included
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Amendment history
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Section 171 is the ANTI-PROFITEERING provision – any reduction in tax rate or benefit of ITC must be passed on to the recipient by a commensurate reduction in price; an authority (now the Competition Commission) adjudicates complaints.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
Anti-profiteering: any reduction in the rate of tax or benefit of input tax credit must be passed on by a commensurate reduction in prices.
The Delhi High Court upheld the provision and its rules in Reckitt Benckiser (29-01-2024); the fight is now on methodology and on the period covered, not on validity.
Examination of new complaints moved to the Competition Commission of India, with the Director General of Anti-profiteering investigating; the sunset for accepting new applications has been notified, so check whether a complaint is even receivable.
The 22-09-2025 rate reductions are the obvious trigger for a fresh round of scrutiny in consumer-facing sectors – businesses that kept prices unchanged after a rate cut should document why.
Questions people actually ask
Real questions we get on this provision, answered straight.
GST on our product fell on 22 September 2025. Must we reduce the price?+
You must pass on the benefit commensurately – section 171 requires it, and the provision has been upheld. If your costs rose at the same time, document the calculation contemporaneously; the Authority looks at the price of the same product before and after, not at your overall margin.
How this provision is built
The skeleton, clause by clause — useful when a notice cites a specific sub-clause.
The exact words of the law
2,488 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
Read the full provision+
(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. 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]
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
date not stated · Inserted
1/2020-C.T
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 …
date not stated · Inserted
Inserted by section 148 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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