Gst On Mrp Products

Maximum Retail Price which is popularly known as MRP is governed by the Legal Metrology Act, 2009. In simple terms, MRP is a manufacturer calculated price which is the highest price that can be charged for a product. The retailer cannot charge more than MRP from the customer. With the implementation of

Goods and Service Tax (GST) on 1st July 2017 there has been lots of change in the percentage of taxation for various products resulting thereby increase or decrease in MRP. Even after the implementation of GST, there has been continuous amendment in the rates of GST of various products. Due to the imposition of GST and continuous amendment in the GST rates need would arise to revise the MRP. In this article, we look at the GST effect on MRP and revision of MRP.

GST included in MRP

As the name itself says Maximum Retail Price (MRP) is the maximum price the seller can charge from the buyer. MRP is inclusive of all taxes including GST. It must be noted that retailers cannot charge GST over and above the MRP. GST is already included in the MRP printed on the product.

Increase Or Decrease In MRP Due To Change In Rate Of GST

There are cases where due to the imposition of GST or change in GST rates, the MRP needs to be revised, on the unsold stock as on the day of the imposition of GST or change in GST rate. In such case, the revised MRP needs to be declared through stickers / online printing/stamping by satisfying the following conditions –

Original MRP should be displayed clearly on the product and the revised MRP should not be overwritten on the original MRP.
The difference cannot be more than the net price increase on account of incidence of tax after factoring in and taking into consideration excess availability of input tax credit under GST and also considering the deemed credit available to the traders under the proviso to section 140(3) of the CGST Act, 2017.
The person willing to revise the MRP is required to give two advertisements in one or more newspapers and the same needs to be intimated to the Director Legal Metrology and Controllers of Legal Metrology in the states.

As per notification WM-10(31)/2017 dated 27.07.2018 issued by the Ministry of Consumer Affairs, Food and Public Distribution, revision in MRP by use of stickers on unsold stock can be done till 31st December, 2018 or till the stock remains unsold, whichever is earlier.

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Frequently Asked Questions

Common questions about GST Impact on MRP Products.

MRP stands for Maximum Retail Price, which is the highest price that can be charged for a product as per the Legal Metrology Act, 2009. MRP is inclusive of all taxes, including GST. The retailer cannot charge more than the MRP from the customer.

No, retailers cannot charge GST over and above the MRP. GST is already included in the MRP printed on the product.

Due to the imposition of GST or changes in GST rates, there may be an increase or decrease in the net tax incidence on a product. In such cases, the MRP needs to be revised on the unsold stock to reflect the new tax rates.

To revise the MRP, the original MRP should be clearly displayed on the product, and the revised MRP should not be overwritten on the original. The difference in MRP should not exceed the net price increase due to the tax rate change, considering input tax credits available.

The revised MRP needs to be declared through stickers, online printing, or stamping. Additionally, two advertisements in one or more newspapers are required, and the Director of Legal Metrology and state Controllers must be intimated.

Yes, according to the notification WM-10(31)/2017, revision of MRP by using stickers on unsold stock can be done till 31st December 2018 or until the stock remains unsold, whichever is earlier.

The revised MRP can be higher or lower than the original MRP, depending on the change in the GST rate and its impact on the net tax incidence on the product.

While it is not explicitly stated as mandatory, the article suggests that the MRP needs to be revised on unsold stock to reflect the change in GST rates and the resulting impact on the net tax incidence.

The purpose of revising the MRP is to ensure that the price charged to the customer accurately reflects the taxes and input tax credits available under the GST regime, thereby avoiding any overcharging or undercharging.

The article suggests that the person willing to revise the MRP is responsible for ensuring compliance with the guidelines, such as advertising the revised MRP and intimating the Director of Legal Metrology and state Controllers.