(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.
1[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.
2[(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 2[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.]
3[Explanation 2.- For the purposes of this section, the expression "Authority" shall include the "Appellate Tribunal".]
(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.
1[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.
2[(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 2[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.]
3[Explanation 2.- For the purposes of this section, the expression "Authority" shall include the "Appellate Tribunal".]
Source footnotes
1. This proviso and Explanation was added by Mah. 8 of 2025, s. 38(1), w.e.f. 27th September 2024.2. Sub-section (3A) was inserted by Mah. 31 of 2019, s. 21, w.e.f. 1st January 2020.
3. Existing Explanation was renumbered as Explanation 1 by Mah. 8 of 2025, s. 38(2), w.e.f. 27th September 2024.
4. Existing Explanation was renumbered as Explanation 1 and after Explanation 1 as so renumbered this Explanation was added by Mah. 8 of 2025, s. 38(2), w.e.f. 27th September 2024.
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More sections of this act
Section 1 · Short title, extent and commencement.Section 2 · Definitions.Section 3 · Officers under this Act.Section 4 · Appointment of officers.Section 5 · Powers of officers.Section 6 · Authorisation of officers of central tax as proper officer in certain circumstances.Section 7 · Scope of supply.Section 8 · Tax liability on composite and mixed supplies.India Code, Government of India. Text fetched 19 Oct 2026. Check the linked official text and subsequent notifications when applying a provision.