Big GST Update: Companies Can Revise MRP on Old Stock; What It Means for You

Following changes in GST rates, companies can now adjust prices on their existing stock. This government decision applies to pre-packaged goods and simplifies adjustments for businesses after GST revisions, while also reducing packaging waste. The move provides significant relief to companies.

GST Rate Restructuring

GST revisions have impacted a wide range of goods, from bread to SUVs. On September 3, rates were largely consolidated into 5% and 18% slabs, with earlier 12% and 28% rates reduced. Essential goods remain GST-exempt, while luxury items continue to attract a 40% ‘sin tax’.

Taxes on several everyday items have been reduced. Hair oil, shampoo, toothpaste, toilet soap, and shaving cream now fall under the 5% GST slab instead of 18%. Similarly, butter, ghee, cheese, dairy products, namkeen, bhujia, and packaged mixtures have seen rates drop from 12% to 5%.

Relief and Challenges for Businesses

While consumers benefit from lower prices, companies, distributors, and retailers face challenges managing old stock and ensuring timely rollout of new inventory.

Companies can now revise prices on old stock in line with the new tax rates, using stickers, stamping, or online printing, while keeping the old price visible. This provision will remain in effect until December 31, 2025, or until the depletion of old stock.

Compliance and Penalties

The government requires companies to publish at least two newspaper advertisements and notify state and central government dealers as well as legal metrology officials about the price changes.

Failure to pass on GST rate benefits to consumers will be treated as an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019. The Central Consumer Protection Authority (CCPA) can impose penalties of up to Rs 10 lakh for the first offense and Rs 50 lakh for repeat violations.