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MRPs need a mention

The centre in order to stop sellers from charging extra in the name of GST has mandated the mention of revised MRPs
By Rounak Kumar Gunjan | July 06, 2017

The economic space in India has witnessed impactful changes since the past fiscal. Right from banning of old currency notes and introduction of new ones late last calendar year to the implementation of the much deliberated upon goods and services tax (GST), the country has observed sea changes in terms of its finances, tax slabs, rates and methods of collection.

GST has brought a virtual end to indirect taxes, such as value added tax, service tax among others. With the apparent master plan being rolled out, prices of some items have surged while that of others have dipped.

Ministry of consumer affairs, food & public distribution in a notification on 4 July mandated the mention of the new maximum retail prices (MRPs) post implementation of GST. In order to protect consumers from being charged extra in the name of tax, department of consumer affairs under the above mentioned ministry said, “declaration of changed MRP has to be done by way of stamping or putting sticker or online printing.”

The government has also permitted companies to sell “unsold stock” at revised prices after stamping or printing the new MRP along with the existing price on the package.

The department of consumer affairs issued an order on Tuesday giving a three month bracket to sellers till 30 September to sell unsold stocks at new prices.

“New price cannot be higher than extent of increase of tax. The original MRP should continue to be displayed and the revised MRP shall not overwrite it,” added the notification.

In a statement issued on Tuesday, department of consumer affairs said: “In exercise of the powers conferred by rule 33 (1) of the Legal Metrology (Packaged Commodities) Rules, 2011, the Central government hereby permits the manufacturers or packers or importers of pre-packaged commodities to declare the changed retail sale price (MRP) on the unsold stock manufactured/ packed/imported prior to 1 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 with effect from 1 July 2017 to 30 September , 2017.”

While consumers are yet to figure out the exact effects of the move, economists took sides while explaining the impacts. A sparsely populated school of thought considers this as breach of states’ freedom to allocate tax rates and said that earlier states could decide on tax rates according to their needs. For example, states having poor infrastructure charged more tax on luxury items to build on its slack and so on, but with tax rates being fixed by the centre, states lose out on that advantage.

Whether this will be in favour of the consumers or not is for time to tell.

 

 

rounak@outlookindia.com

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