What can consumers do if the retailers charge more than the MRP?

If a retailer charges more than the MRP, consumers can file a complaint with the Legal Metrology Department or Consumer Court. They may be fined or penalized for violating the Consumer Protection Act.

Is there a limit on MRP?

Yes, the Maximum Retail Price (MRP) is the highest price at which a product can be sold. It includes all taxes and is regulated by the Legal Metrology Act to prevent overcharging.

What is the section for selling more than MRP?

Under the Legal Metrology (Packaged Commodities) Rules, Section 36 of the Legal Metrology Act addresses the sale of goods at a price higher than the MRP, imposing fines and penalties for such violations.

What is the relationship between GST and the MRP of goods and services?

GST affects the MRP by adding or reducing taxes on goods and services. The MRP includes GST, so changes in GST rates directly impact the final price consumers pay for products.

How has the introduction of GST affected the pricing of everyday consumer products?

GST has simplified pricing by consolidating multiple indirect taxes into one. In some cases, it has led to price reductions, while in others, it has caused price increases due to changes in tax rates for different goods.

Why does the MRP of some goods increase while others decrease under GST?

The MRP of goods can increase or decrease under GST due to varying tax rates. Items previously taxed at higher rates may see a price drop, while those taxed at a new or higher rate may see an increase.

What role do GST rates play in determining the MRP of goods?

GST rates directly influence the MRP of goods. A higher GST rate increases the MRP, while a lower rate can reduce the MRP. Businesses factor in these rates when setting final prices for consumers.

Can businesses revise the MRP of products due to changes in GST rates?

Yes, businesses can revise the MRP if there is a change in GST rates. If the GST rate on a product increases or decreases, the MRP must be adjusted accordingly to reflect the new tax structure.

How does GST compliance affect the cost structure of manufacturers and sellers?

GST compliance adds administrative costs for manufacturers and sellers, requiring them to maintain accurate records and file returns. It may also affect their cost structure as they must factor in GST credits and taxes when pricing products.

Are businesses required to display GST separately on the MRP label?

No, businesses are not required to display GST separately on the MRP label. The MRP includes all taxes, and consumers see the total price, which already reflects the GST. However, tax invoices may show the GST breakdown.

Impact of GST on MRP of Goods and Services

Updated Upd Feb 9, 2026

Published Pub Feb 21, 2023

12 min

By Susheel Kumar

Quick Summary

GST has replaced most indirect taxes in India, reducing the cascading tax effect and potentially lowering final product prices.
The Maximum Retail Price (MRP) is the highest price a retailer can charge, including all costs and taxes, ensuring fair pricing and consumer protection.
Businesses must adjust MRPs to reflect changes in GST rates, ensuring compliance and transparency for consumers.
Selling above the MRP is illegal and can result in penalties, including fines and jail time for retailers.
Consumers can report overcharging above the MRP to authorities, and businesses should stay updated on GST regulations to avoid legal issues.

Most of India’s indirect taxes have been replaced with the Goods and Service Tax (GST). Before implementing the GST, businesses were obligated to pay tax at each stage of the supply chain. The cascading impact causes goods prices to increase. Though, the purchase of raw materials is still eligible for an input tax credit under GST . By doing this, the cascading effect on the product’s final price will be reduced.

Most of India’s indirect taxes have been replaced with the Goods and Service Tax (GST). Before implementing the GST, businesses were obligated to pay tax at each stage of the supply chain. The cascading impact causes goods prices to increase. Though, the purchase of raw materials is still eligible for an input tax credit under GST. By doing this, the cascading effect on the product’s final price will be reduced.

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What Is MRP?

A maximum retail price is printed on every product. Before a product is sold in India, the producers determine the highest price for that particular commodity. Retailers cannot charge customers more than by the MRP.

Why is MRP Important?

The maximum retail price (MRP) is the highest price at which a product can be sold to consumers, as printed on its packaging. It ensures transparency in pricing, protects consumers from being overcharged, and maintains fair trade practices.

For businesses, MRP simplifies pricing across different regions, ensuring consistency. Consumers benefit by knowing the maximum amount they need to pay, avoiding exploitation. Additionally, MRP helps businesses comply with legal regulations, as selling above MRP is prohibited in India.

MRP also includes all costs like production, taxes, and logistics, ensuring fair pricing for both sellers and buyers. By regulating pricing practices, it fosters trust between consumers and businesses, contributing to a stable market environment.

MRP Calculation with Formula

MRP is calculated by including the cost of production, taxes, transportation, and profit margin. The formula is:

MRP = Cost Price + Profit Margin + Taxes + Transportation Costs

For example, if the cost price of a product is ₹100, profit margin is ₹20, taxes are ₹10, and transportation costs ₹5, the MRP will be:

MRP = ₹100 + ₹20 + ₹10 + ₹5 = ₹135

This calculation ensures that all costs are covered, allowing fair pricing and profitability for businesses while keeping consumers informed about what they are paying for.

GST Impact On MRP Of Goods And Services

The tax rates on various goods have changed quite a bit since the introduction of GST in July 2017. The maximum retail price may therefore increase or decrease. A taxpayer could not always be eligible to collect ITC under GST. In these situations, prices do not decrease. Because of the adoption of GST and ongoing revision of GST rates, Adjusting the maximum retail price is necessary. To pass on the advantages of the reduced GST rate and the ITC advantage, for instance, the prices of FMCG goods have been lowered since the introduction of the GST.

GST Rule For Manufacturers Regarding Change In MRP

A manufacturer must meet the standards below to revise the maximum retail price.

Both the original and revised maximum retail price must be disclosed on the products. You shouldn’t replace the original with the revised version.
The product’s net price increase due to tax cannot exceed the increase in maximum retail price.

For example – The old MRP is Rs. 1000. There is an increase in the tax amount due to a change in GST rate is Rs. 100. New MRP is Rs. 1100 (Cannot surpass this value). Only the manufacturer’s stocked item we needed to appear in the advertising.

Revised MRP and GST Amendments

Revisions in MRP often occur due to changes in input costs, government policies, or GST amendments . For example, if the GST rate on a product changes, businesses must adjust the MRP to reflect the new tax structure.

Under GST rules, businesses must display the revised MRP on product packaging, ensuring compliance and consumer clarity. Failure to update MRPs after GST amendments can lead to penalties.

Revised MRPs benefit consumers by ensuring transparency and proper tax implementation. Businesses, meanwhile, can avoid legal issues by promptly updating their prices. GST-driven revisions emphasize the importance of regularly reviewing MRPs to align with tax and policy changes.

What To Do If a Shop Charges More Than The MRP?

According to the government, the MRP is the highest price that can be charged for a product at retail. You are not required to spend even a single penny more than an MRP because GST is already incorporated. Selling products beyond MRP is illegal under many statutes, including the Monopolies and Restrictive Trade Practices (MRTP) Act, the Essential Commodities Act, and the Consumer Protection Act. Selling products above MRP also violates the GST regime’s anti-profiteering provisions. The GST registration could be cancelled as a result of this. However, retailers can sell at a lower price than the MRP.

The Indian central government established the national anti-profiteering authority to look into whether ITC earned by a registered person or a reduction in tax rates has led to a decrease in costs and whether this has been passed on to consumers. This ensures that the price will remain consistent and that enterprises won’t make excessive profits.

Penalties For Levying GST On MRP Of Goods

If a retailer sells goods for more than the maximum retail price, they can be penalized with either a 1 lakh fine or 1 year in Jail.

Also Know More About: Penalties under GST

Explore All BUSY Calculators for Easy GST Compliance

Conclusion

The Goods and Services Tax (GST) has significantly impacted the Maximum Retail Price (MRP) of goods and services in India. The introduction of GST has brought about a uniform taxation system, eliminating the cascading effect of taxes on the MRP. It is crucial for businesses to comply with the GST regulations and ensure that the MRP includes all applicable taxes to avoid penalties and maintain compliance.

Moreover, businesses found to be overcharging customers by levying GST on MRP can face severe penalties, including cancellation of GST registration and legal action. Therefore, it is essential for businesses to stay updated with the latest GST regulations and ensure compliance to avoid any legal issues and maintain their financial health.

GST Rates for Products

GST Rates: GST on ac GST for laptops GST on iphone GST for hotel room GST on flight tickets GST on silver GST for tv wood GST rate GST on train tickets GST on water bottle GST for medicines GST on tyres GST in garments GST on milk GST on stationery GST on tractor GST for food GST rate on tiles GST on sweets GST on gold