A Maximum Retail Price is a maximum price which can be charged from the consumers in India as specified by the authority figures. Under the Consumer Goods (mandatory printing of cost of Production and Maximum Retail Price) Act, 2006, consumers cannot be charged more than the MRP mentioned on the packing of the products.
After the implementation of GST, prices of many products just got some changes from the previously followed structure. The government has revised the MRP rules for the businesses and Consumer Ministry has directed the businesses to paste the new stickers with fresh pricing.
Latest Update
04th August 2022
- The recent decision to impose 5% GST on pre-packaged items, the Department of Consumer Affairs has published a letter clarifying the impact of GST on unsold products of pre-packaged items effect from 01.08.2022. The manufacturers, packers, and importers are permitted to display fixed MRPs on unsold stock up to 31st Jan 2023 as per the official letter.
MRP Rules After Implementation of GST
- If the price of the product has increased after GST imposition, the manufacturer of the said product needs to release an advertisement in at least two newspapers regarding the updated price
- Only the stocked products with the manufacturer are required to put on the advertisement. The new products coming after 1st July are not covered under the advertisement rule
- The advertisement rule is applicable for three months(1st July to 30th September) of implementation of GST
- If the price of the product has decreased after GST implementation, the manufacturer doesn’t need to advertise regarding the reduced price on newspaper
- In both the cases, if price of product has increased or decreased, manufacturer is required to put the new sticker along with old sticker for the stocked products till 30th September and for new products, the manufacturer will put only the revised price
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Complaint Against The MRP If Seller Charges More
Latest guidelines issued by the CBEC stats that if any retailer asks for GST above the MRP of a product then the consumer can be clearly denied and the complaint must be lodged against him at the ministry and various anti-profiteering commissions setup in India.
MRP includes all the taxes and sellers are not liable to charge more over and above the mentioned price on the products. Manufacturers and sellers are only allowed to sell at the lesser price than MRP and offer a discount on MRP for particular products.
After implementation of GST, at some places, consumers are asked to pay more over MRP saying GST has increased the cost of the products. It is clearly defined in the directives that if the price has increased, the manufacturer has to put an advertisement for the same in at least two newspapers and it is required to put the old and new both price stickers for the old stocks until 30th September.
Uma Shanti, GST commissionerate, spoke regarding the consumer rights and provoked the consumer to the complaint if shopkeeper asks to pay more over MRP. As she said, “If products are sold at higher prices without following rules, action can be taken against shopkeepers. It includes a penalty of one year in jail or a fine up to Rs. one lakh,”
The consumer needs to be more aware of the prevailing conspiracies and if sellers ask them to pay more than the MRP, they can lodge a complaint regarding the same to the consumer ministry on www.tnlegalmetrology.in
Group of ministers, headed by Assam Finance Minister Himanta Biswa Sarma and the team of ministers which are the part of GoM has decided that there must be a new MRP rule which must state that all the packaged and products having MRP on them should be included the GST in the price itself. MRP is the maximum price which can be charged by a trader from the customer but in some cases, GST was been collected above the MRP.
According to the latest sources, it is mentioned that “We have suggested that when businesses issue invoice to consumers, the MRP should be inclusive of GST. The bifurcation in tax collection and sale price can be shown in the invoice while paying taxes to the government.”
MRP under GST Turns Strict
The Telangana metrology department has been doing a round of scan for any irrelevant MRP tagging on the products. The government has also stated that strict action will is taken against the offender. The penalty of 2000 to 25000 has been decided by the department which will be levied upon any malpractices. The main agenda is to stop the practices of collecting GST over the price tag i.e. MRP on the product itself.
CV Anand, the state’s civil supplies commissioner and legal metrology department’s controller mentioned that “Customers should be made aware that GST is included in the MRP and it should not be charged separately. Several complaints have come to light of additional GST being charged over MRP on packaged goods, and some non-taxed goods are also been taxed with GST. It is illegal.”
The department has also started a grievance cell to combat any complaint regarding the collection of GST over the MRP of the product.
Effects of GST Council Meeting on MRP
Vanaja Sarna, Chairperson of Central Board of Excise and Customs (CBEC) has communicated to all FMCG companies to revise the maximum retail price on all of the products, after the announcement of a reduction in GST rates on 10th November.
In a letter to all FMCG companies, Sarna pointed out that, it is essential that all companies must revise the MRP instantly on all of the products in line on which the tax rates have been reduced by the GST Council, the finance ministry said in a statement.
Sarna has also urged to all to promote widely the revised MRP of products. The government is expecting that the industry immediately takes some actions on request made by the finance minister on this issue.
Tax rates on the number of items have been reduced by the government from 18 percent to 12 percent and also from 12 percent to 5 percent. Some of the items on which GST rates has been reduced from 28 percent to 18 percent namely chocolates, custard powder, sanitary ware, dental hygiene, creams, polishes, deodorants, detergent, washing powder, watches, goggles, wristwatches, mattresses, razors, blades and many more.
Additionally, tax rates on items have been reduced from 18 percent to 12 percent include refined sugar, condensed milk, diabetic food, medical grade oxygen, hats, bamboo/cane furniture.
Whether MRP will Increase or Decrease after GST
The Goods & Services Tax (GST) regime was implemented in India in July 2017. GST is an indirect tax regime that has specific tax slabs for different categories of goods and services. Ever since the launch of GST, the MRP (Max Retail Price) of a number of goods has changed because of the change in the tax rates & amount.
MRP includes the base price plus GST/tax. As the tax rate changes, the MRP of the product either decreases or increases.
Another factor that affects the MRP under GST is the availability of ITC. In some cases of the act, Input Tax Credit is not available under GST, which means the MRP of such products will increase.
On the other hand, MRP of some products, including FMCG products, has reduced because of the reduced tax rate under GST.
GST Rules for Change in MRP Due to Increase or Decrease in Tax
As per the GST norms, a manufacturer is required to adjust the MRP of his/her products in the following manner:
- The product must show both previous and new MRP clearly. The new price should not replace or overwrite the original price.
- New MRP will be the exact sum of the old MRP and the tax change and not more. For example, if the old price was rs 200 and the tax increase due to GST is rs 20, the new MRP should be rs 220.
- The manufacturer who wishes to revise the MRP of his products must give at least two advertisements in newspapers, intimating the price change to the customers. At the same time, they must intimate the price change to the company director, legal metrology, and controller of legal metrology in respective states.
- Manufacturers, however, are not required to publish advertisements in newspapers in case the price of their product/s is reduced due to GST.
- In any case, the new MRP sticker along with the old MRP sticker must be placed clearly on the product package.
The rules were applicable only to products that were already in stock at the time of the launch of GST on 1st July 2017. Products coming after the GST launch were not needed to be advertised in newspapers. Manufacturers were required to advertise the new MRP for their stocked products for three months after the GST launch.
What can a Consumer do if Retailers Charge More Than MRP?
Even though retailers are strictly instructed to revise their MRP according to the new GST norms, there are some that are still charging the old rate or levying GST over the maximum retail price. In such a case, the consumer can file a complaint against the manufacturer/seller through proper authorities set up for this purpose.
GST or any tax is always included in the product MRP. In any case, a retailer can never charge more than MRP.
The Government of India has established a dedicated agency called National Anti-profiteering Authority, which is responsible to look into the cases where the benefits of GST reduction are not being passed to end consumers. At the same time, the authority examines whether ITC claimed by a taxpayer is legit or not. In case of a dispute, one can file a complaint with the National Anti-profiteering Authority
