Govt Allows Manufacturers to Revise MRP on Unsold Stock Due to GST Rate Changes

The Indian Department of Consumer Affairs has allowed manufacturers to revise the Maximum Retail Price (MRP) on unsold stock due to GST rate changes. The revised MRP can be declared by stamping, putting a sticker, or online printing, provided the original MRP is displayed. The move aims to provide relief to consumers and is valid until December 31, 2025, or until the stock is exhausted, whichever is earlier.

The Indian Department of Consumer Affairs has recently granted manufacturers the flexibility to revise the Maximum Retail Price (MRP) on unsold stock in response to changes in Goods and Services Tax (GST) rates. This move is aimed at providing relief to consumers and is valid until December 31, 2025, or until the stock is exhausted, whichever comes first. The revised MRP can be declared by stamping, putting a sticker, or online printing, provided the original MRP is displayed.

The Legal Metrology Act, 2009 (LM Act) and the Legal Metrology (Packaged Commodities) Rules, 2011 (LM Rules) govern the display of MRP on pre-packaged commodities. Rule 2(m) of the LM Rules defines MRP as the maximum price at which a commodity in packaged form may be sold to the consumer, inclusive of all taxes, including GST. With the rollout of GST 2.0 reforms and consequent revisions in GST rates, various situations have arisen where MRP adjustments are necessary.

The LM Rules permit manufacturers or packers to affix stickers showing the revised lower MRP, provided the original printed MRP is not obscured. Additionally, Rule 18(3) of the LM Rules mandates that any change in MRP must be communicated promptly throughout the supply chain. This includes publishing two advertisements in reputable newspapers and issuing formal notices to the dealer, the Director in the Central Government, and Controllers of Legal Metrology.

Previously, during the introduction of GST in July 2017 and the subsequent GST rate reduction in November 2017, the Department of Consumer Affairs issued orders relaxing the provisions of the LM Rules. This allowed manufacturers or packers to declare the revised MRP on unsold stock by stamping, putting stickers, or online printing, subject to certain conditions such as advertisements and the circulation of notices to specific persons. Given this precedent, a similar approach is likely to be followed during the current GST 2.0 reforms to facilitate the smooth adjustment of MRPs in line with revised GST rates.

Manufacturers will need to analyze the manner of re-stickering or packaging of products to display the revised MRP based on the location of the unsold stock (warehouse, Special Economic Zone, retailer, dealer, etc.) and the licenses held by the company under the LM Act. The National Pharmaceutical Pricing Authority (NPPA) governs the pricing of scheduled and non-scheduled drugs under the Drugs (Price Control) Order, 2013 (DPCO), and has directed companies to reduce MRPs in line with GST reductions.

Section 2(9)(ii) of the Consumer Protection Act, 2019, provides that consumers have the right to be informed about the price of goods and services to protect against unfair trade practices. Therefore, it is inferred that consumers must be informed about the revision of MRP resulting from changes in GST rates. The Ministry of Finance has issued FAQs after the GST Council's 56th meeting held on September 3, 2025, clarifying that new GST rates will be applicable on the outward supplies of goods once notified.

While certain aspects await further official clarifications, it is advisable for manufacturers, packers, importers, and dealers to stay aligned with the LM Act and LM Rules.

References:
[1] https://www.lexology.com/library/detail.aspx?g=90dbae99-7800-4f77-a79f-3d248196bae1