A Maximum Retail Price is the 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, the 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.
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 the GST
- If the price of the product has decreased after GST implementation, the manufacturer doesn’t need to advertise the reduced price in the newspaper
- In both cases, if the price of the product has increased or decreased, the manufacturer is required to put the new sticker along with the old sticker for the stocked products till 30th September and for new products, the manufacturer will put only the revised price
Recommended: How to Check that Your GST Bill of Restaurant is Correct or Not?
Complaint Against The MRP If Seller Charges More
The latest guidelines issued by the CBEC state 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 set up 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 a lesser price than MRP and offer a discount on MRP for particular products.
After the implementation of GST, in 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 price stickers for the old stocks until 30th September.
Uma Shanti, GST commissionerate, spoke regarding consumer rights and provoked the consumer to complain if the 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
GoM has decided that there must be a new MRP rule which must state that all the packaged products having MRP on them should be included in 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 invoices 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 scans for any irrelevant MRP tagging on the products. The government has also stated that strict action will be 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 the 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 all to promote widely the revised MRP of products. The government is expecting the industry to immediately take some action on requests made by the finance minister on this issue.
Tax rates on the number of items have been reduced by the government from 18 per cent to 12 per cent and also from 12 per cent to 5 per cent. Some of the items on which GST rates have been reduced from 28 per cent to 18 per cent 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 per cent to 12 per cent include refined sugar, condensed milk, diabetic food, medical grade oxygen, hats, and 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, the MRP of some products, including FMCG products, has been 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.
- The 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 did not need 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 the 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 the National Anti-profiteering Authority, which is responsible for looking 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
Sir
My manufactured product cost is ₹ 540, I am adding branded company’s product ₹50 and ₹30 for another product and I make one box that contains all these products.
What should my MRP?
₹540+₹50+₹30= ₹620 or can I add ₹30 for the box that carries all these three items and charge for ₹650 inclusive of all taxes?
INR 650 should be your MRP
Hello,
I am a manufacturer who wishes to sell his products directly to retailers who can further sell it to end customers. This is the first time we are selling through this medium as earlier we were a B2B business dealing in capital goods and not consumer goods. I have the following doubts regarding MRP and GST.
For example: Suppose the cost of the product I manufacture is rs.100.
My profit margin is 30% on the cost of the good.
GST to be charged is 18%.
The MRP to be set is rs.200.
In such a case what is the GST I have to charge to the retailer? Is it 18% of rs 130?
Also in this case as a manufacturer how should I be setting the MRP considering GST and retailers margin and at the same time following govt. guidelines.
Please help.
GST is charged on the final cost of a product, here it is INR 200 so GST is charged on it
On of the seller offers a 50% discount on MRP is he allowed to charge GST over and above the discounted amount, since MRP is already inclusive of GST, thus discounted amount should also be inclusive of GST
MRP 1599
DISC 50% (799)
Disc amount payable = 799
Now they are charging 5%GST as transaction tex for this amount
Is this correct??
pl tell me if they are doing wrong, then also tell me in which GST section is not allowed to take this extra GST again.
GST is chargeable only on INR 799 not on INR 1599
thank you for your reply but u said GST is chargeable only on INR 799 not on INR 1599, but as per MRP rules all tax is included, then how can they charge GST on a discount rate of MRP, pl suggest me
Sir, all taxes on the taxable value of goods is included, not on the discounted value of goods
Hi,
Any update on this rule, because for the similar question you have given the different reply
December 19, 2018, at 11:48 pm
I purchased a product for rupee 1000(M.R.P). They said I have a discount of about 60%. Then they mentioned in their T&C that “extra taxes” and in the bill, it had a T&C that “tax will be charged at the applicable rate on the discounted price”
I had to pay the tax for the 40%(which is already containing tax amount as mentioned in their price tag). Is that right to charge GST after giving the discount on M.R.P.
REPLY
SAG INFOTECH
December 24, 2018, at 6:58 pm
No, GST cannot be charged on MRP as it is inclusive of taxes, and even after discounted value 40% portion is inclusive of GST.
Sir, Please contact to GST practitioner
This is the same thing that was happened with me, actually in old tax regime a backward calculation is done to find the tax amount, and the transaction value would not be the price after discount .
This would be the case of double
taxation.
Can 2 different online portal can have 2 different MRP of same product in fashion and lifestyle category?
Yes
Hi,
Please suggest, I have not mentioned discount on the bill. The bill is a net of Discount. what would be the penalty procedure of penalty if the department caught my goods on the way and asked me to bear penalty on MRP
In the GST portal, there is no option of a discount. whatever the amount you will enter it will be deemed as after discount or net taxable value. For penalty procedure please contact GST Practitioner.
Dear Sir,
How much maximum percent discount can be mentioned on the bill by a manufacturer to his/her dealer that will not be considered as under billing or fake billing by the tax department.
Sir, this totally depends upon you accounting billing system, we can’t provide you the fixed rate of discount percentage.
Hi, Let me know the written matter compulsorily required on the MRP labels. Like manufacturing date, MRP, model no, etc.
Yes
I would like to know I have buy new tyre where there is no MRP , where is Tube is having . Why Tyre is not having
It depends upon the vendor of tyre that whether MRP act is applicable to them or not. You have to contact the vendor.
Hello,
Is it mandatory to have MRP for industrial products?
Selling school notebook without MRP by the vendor. is this punishable if yes then what is a penalty on the vendor?
Legally, all the packaged products should bear a printed price/MRP on it. Penalty may contain fine or imprisonment or both depends on the circumstances of your case. Thus you have to raise a complaint first on the contact details provided.
Sir,
We have sent 3 boxes worth Rs.1800.00 to retailers for sale but by mistake MRP not mentioned. what is the penalty and remedy in such cases while we have paid proper GST.
Please contact GST practitioner
IF, SUPPOSE I PURCHASED 100 UNITS GOODS WORTH MRP INR.100 ON WHICH TAX IS APPLICABLE AT A RATE OF 28%. ON A DAY, I AM HAVING ONLY 25 UNITS LEFT AND GOVT. CHANGED GST RATE FROM 28 TO 18%. THEN WHAT WILL I DO?. DID I NEED TO REVISE MY PRICE AND IF I DO SO, DID I ALSO NEED TO INAVAIL MY ITC ALREADY CLAIMED AT 28%? PLEASE REPLY.
Yes. the same needs to be done as you cannot sell at earlier price after notification effecting price reduction is implemented.
I purchased a product for rupee 1000(M.R.P). They said I have a discount of about 60%. Then they mentioned in their T&C that “extra taxes” and in the bill, it had a T&C that “tax will be charged at the applicable rate on the discounted price”
I had to pay the tax for the 40%(which is already containing tax amount as the mentioned in their price tag). Is that right to charge GST after giving the discount on M.R.P.
No, GST cannot be charged on MRP as it is inclusive of taxes and even after discounted value 40% portion is inclusive of GST.
It is a restaurant. I ate food worth 100 rupees and bought their own packeted snacks worth 100 rupees printed as its MRP. The final bill was 200 plus GST over 200. Can they ask me to pay GST over the packeted food, because the printed MRP is 100? My question is whether the final bill is 100 + (100 + 100 multiplied by GST rate) or is it 200 + (200 multiplied by GST rate).
MRP is inclusive of taxes so GST cannot be again charged on it. GST shall be chargeable on Rs. 100 only.
The final bill is 100 + (100 + 100 multiplied by GST rate)
GST cannot be charged again on MRP since Rs.100 is inclusive of GST component.
if mrp =200,
selling price=190
Gst=18%
190*18/100=34.2
190+34.2=224.2
It is correct
No, MRP is inclusive of GST, so actual selling price is 200*100/118=169.49 and GST is 200*18/118=30.51
Please suggest, does Besan 35kg Bag required MRP?
Every product has MRP which is independent of the quantity
When I went to purchase a wall mount fan, the trader offered a discount price of Rs 1750/- without GST and Rs 2065/- GST. Is it correct? Can he sell goods with or without GST at Customer’s choice?
No, he cannot. As it is necessary to issue invoice against item sold if he is registered and to charge GST on same.
Footwear below MRP 999.00 GST is now 5%. Is it necessary to print MrP on the product and is it necessary to mention product detail on the invoice.
Yes, as per CGST Rules, it is necessary.
I’M A NEW SELLER. PLEASE TELL ME THAT I HAVE TO CHARGE GST ON PURCHASE VALUE OR AFTER ADDING MY PROFIT. FOR EXAMPLE:
I
PURCHASE GOODS RS. 9800 GST RS. 490 TOTAL COST RS. 9800+490 = 10290
MY PROFIT 2000
SO NOW I CHARGE GST FROM CUSTOMER ON RS. 10290 OR RS. 12290.
GST shall be applicable on Rs. 11,800(9800 cost+ 2000 profit)
I have purchased a product at no discount from the Shoppers Stop. The MRP on the product was Rs. 2375 and Rs 225. When I checked my bill, there were GST charges on top of MRP. Is this the practice for the shops in Mall or with any big retailers?
Please suggest what actions I can take if this is malpractice.
This practice is not correct as MRP is inclusive of taxes and person cannot charge GST again on MRP. If this is happening contact helpdesk of GST for the same.
What should we do if shopkeeper wants GST on (over) MRP…?
Sir,
Recently I purchased a pair of shoes online which showed 50% discount on MRP and when it was billed it showed MRP less 50% discount and add GST which was making value higher say for example 5599 MRP after 50% discount it came to 2800 plus. I was levied 503.82 as a GST making total 3303.82 is this valid calculation or some fraud was done, kindly explain.
YES THIS IS VALID BECAUSE AFTER DISCOUNT AND ADD GST 3303.82 IS NOT MORE THAN MRP.5599