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GST on MRP Products


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 –

  1. Original MRP should be displayed clearly on the product and the revised MRP should not be overwritten on the original MRP.
  2. 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.
  3. 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.