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What does section 171(1) of the CGST Act, 2017 require of a supplier?

Question and options

What does section 171(1) of the CGST Act, 2017 require of a supplier?

  1. To refund to the Government any credit beyond its output tax

  2. To print a maximum retail price on all goods sold to consumers

  3. To pass any rate cut or credit benefit to recipients by lower prices

  4. To keep its profit margin on any supply within a notified ceiling

Answer and explanation

Correct answer: C - To pass any rate cut or credit benefit to recipients by lower prices

Section 171(1) of the CGST Act requires any reduction in the rate of tax on a supply, or the benefit of input tax credit, to be passed on to the recipient by way of a commensurate reduction in prices. It does not cap profit margins, require price labelling or claw back surplus credit.

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