Section 171 of CGST Act - Anti-Profiteering Measure
Section 171 of the Central Goods and Services Tax Act, 2017 requires the benefit of a reduction in the GST rate or the benefit of input tax credit to be passed on to the recipient through a commensurate reduction in price.
Updated: 15 September 2026
What is the anti-profiteering measure under GST?
The anti-profiteering provision is intended to ensure that a supplier does not retain a tax benefit that Section 171 requires to be passed to the recipient. Two events are expressly covered: a reduction in the rate of tax on a supply, and the benefit of input tax credit. Where either benefit arises, the supplier must pass it on by a commensurate reduction in the price.
The expression commensurate reduction means a price reduction corresponding to the tax-rate or input-tax-credit benefit attributable to the supply. Section 171 does not state a single fixed mathematical percentage for every case; the relevant benefit and pricing facts have to be examined in their statutory context.
Section 171 of the Central Goods and Services Tax Act, 2017
Section 171(1): Any reduction in the rate of tax on any supply of goods or services, or the benefit of input tax credit, is required to be passed on to the recipient by way of a commensurate reduction in prices.
Section 171(2): The Central Government may, on the recommendations of the GST Council, constitute an Authority or empower an existing Authority to examine whether input-tax-credit benefits or a reduction in tax rate have resulted in a commensurate reduction in the price of goods or services or both. The provision also enables the Government to specify a date from which the Authority will not accept a new request for such examination.
Section 171(3): The Authority exercises the powers and performs the functions prescribed under the CGST Rules.
Section 171(3A): Where the prescribed examination concludes that a registered person has profiteered under sub-section (1), a penalty equal to ten per cent of the profiteered amount may apply. No penalty is leviable where the profiteered amount is deposited within thirty days from the date of the Authority's order.
Important terms under Section 171
| Term | Practical meaning |
|---|---|
| Input tax credit (ITC) | Credit of eligible GST paid on inward supplies, subject to the conditions and restrictions of the CGST Act and Rules. |
| Recipient | The person who is liable to pay consideration for the supply, or the person identified by the statutory definition where consideration is not payable. |
| Commensurate reduction | A corresponding reduction in price reflecting the benefit arising from the relevant tax-rate reduction or ITC benefit. |
| Profiteered amount | For Section 171, the amount determined on account of failure to pass the covered tax-rate or ITC benefit to the recipient by a commensurate price reduction. |
| Request for examination | A written application requesting examination of whether the relevant ITC or tax-rate benefit resulted in a commensurate price reduction. |
Which authority deals with Section 171 cases?
The institutional mechanism has changed over time. The Competition Commission of India was empowered to handle anti-profiteering cases with effect from 1 December 2022. Subsequently, Notification No. 18/2024-Central Tax dated 30 September 2024 empowered the Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) to examine Section 171 anti-profiteering matters, with effect from 1 October 2024.
The change is relevant particularly to pending or maintainable legacy proceedings. It should not be read as reopening the window for fresh anti-profiteering requests after the statutory cut-off described below.
Cut-off from 1 April 2025
Notification No. 19/2024-Central Tax dated 30 September 2024 specified 1 April 2025 as the date from which the Authority referred to in Section 171 will not accept any new request for examination of whether the benefit of ITC or a reduction in the tax rate has resulted in a commensurate reduction in price.
Accordingly, the present legal position distinguishes between the continuing substantive rule in Section 171(1) and the closure of the statutory window for filing fresh anti-profiteering examination requests from 1 April 2025. Pending and earlier-filed matters are governed by the applicable statutory and procedural framework.
Penalty for profiteering - Section 171(3A)
Section 171(3A), introduced with effect from 1 January 2020, provides for a penalty equal to 10% of the profiteered amount where the prescribed examination results in a finding of profiteering under Section 171(1). The proviso protects a person from that penalty where the profiteered amount is deposited within thirty days from the date of the order.
Practical effect of Section 171
For the period in which an anti-profiteering examination is maintainable, the central question is whether an identifiable GST benefit was actually passed to recipients through a corresponding price reduction. The analysis may therefore involve the applicable tax rate, the availability and extent of ITC, the pricing period, invoices and other records relevant to the supply.
Section 171 should be read with the applicable CGST Rules, notifications and orders. Historical cases may also involve different authorities depending on when the proceeding was instituted or transferred.
Official legal references
For the authoritative statutory text and current notifications, readers should verify the latest material issued by the Government. Useful official sources include the CBIC - Central Goods and Services Tax Act, the CBIC Central Tax Notifications, and the Goods and Services Tax Council.