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Impact of GST on MRP in India

The Goods and Services Tax, 2017 became effective in India from 1st July 2017. The biggest tax reform had apart from other mind boggling questions, raised a yet another and confusing question especially to the retailers that “what would be the impact of GST on MRP in India”.

They apprehend that whether the GST will be added on the maximum retail price i.e. the MRP value or whether MRP will be inclusive of GST and how the increase or decrease of the same should be articulated to the ultimate consumers.

To answer the above questions, Ram Vilas Paswan, Union Minister for Consumer Affairs, Food & Public Distribution has allowed the manufacturers or packers or importers of pre-packaged commodities to declare the change retail sale price (MRP) on the unsold stock manufactured/ packed/ imported prior to 1st July, 2017 after inclusion of the increased amount of tax due to GST if any, in addition to the existing retail sale price (MRP), for three months w.e.f. 1st July 2017 to 30th September, 2017.  Declaration of the changed retail sale price (MRP) shall be made by way of stamping or putting sticker or online printing, as the case may be. The businesses are required to put up revised prices along with the original prices as stickers on the product till September 2017.

The old and new price, both should be showed on the packaging. Under the GST regime, if a price of a product has increased the manufacturer/ importer/ packer will have to give an advertisement in two newspapers about the new MRP and put a revised sticker on the packaging, New MRP should be mentioned on the items where prices have increased due to GST so that the consumers can be aware of the impact of GST and for products whose prices have come down under the new tax regime, no newspaper advertisements would need to be published. However, a sticker mentioning the new MRP is mandatory, and the old price should show too on the packaging.

The Central Government has allowed the declaration of the changed MRP shall be made by way of stamping or putting sticker or online printing, as the case may be, after the following conditions has been complied with:-

(i) The difference between the retail sale price originally printed on the package and the revised price shall not be higher than the extent of increase in the tax if any, or in the case of imposition of fresh tax, such fresh tax, on account of implementation of GST Act and Rules.

(ii) The revised price shall not overwrite on MRP; The original MRP shall continue to be displayed.

(iii) To indicate the changes in the price of such packages, Manufactures or packers or importers shall make atleast two advertisements in one or more newspapers in this regard and also by circulation of notices to the dealers and to the Director of Legal Metrology in the Central Government and Controllers of Legal Metrology in the States and Union Territories,

(iv) For reducing the MRP, a sticker with the revised lower MRP (inclusive of all taxes) may be affixed and the same shall not overwrite on MRP, The original MRP shall continue to be displayed.

(v) Any packaging material or wrapper which could not be exhausted by the manufacturer or packer or importer prior to 1st July, 2017, may be used for packing of material:-

  • upto 30th September, 2017 or
  • till such date the packing material or wrapper is exhausted

Whichever is earlier.