GST: Retailers can sell pre-reform inventory with new price stickers, govt's new rules say

Retailers with unsold pre-GST stock of products have been allowed to stick new prices on them for sales, taking into account the post-GST changes, as per a new notification by the government.

However, if there is a price increase, they should advertise in two newspapers. The notification to this effect was issued on Tuesday.

The notification clears the confusion over transition to the new tax regime, which had forced retailers to engage in discount sales to liquidate unsold inventory of products manufactured before GST roll-out.

The rules were tweeted out by Union Minister for Consumer Affairs, Food and Public Distribution.

The new stickers with revised rates have to be pasted alongside the printed MRP for pre-packaged items and the retailers can do this for three months or 30 September.



Several businesses were left with huge unsold inventories before the GST kicked in from 1 July. The unsold items had an MRP which included all taxes of pre-GST era but with the implementation of new regime, some of the final retail prices have undergone changes because of increase or decrease in tax incidences.

The old maximum retail price (MRP) will have to be necessarily displayed on the unsold inventories and the new rates can be reflected by way of pastable stickers alongside, Consumer Affairs Secretary Avinash Srivastava was quoted as saying in a PTI report.

On items where the price has to be increased for unsold stocks, the manufacturer or packer or importer will have to give at least two advertisements in two or more newspapers informing people about the change.

However, after 30 September, the printed MRP on pre-packaged commodity will have to necessary include the GST rate and no add-on stickers would be allowed.

"The central government hereby, permits the manufacturer or packer or importer of pre-packaged commodities to declare the changed retail sale price (MRP) for three months from July 1 September 30. Declaration of the changed MRP shall be made by way of stamping or putting sticker or online printing," a government notification said.

The difference between the retail sale price originally printed on the package and the revised price "shall not, in any case, be higher than the extent of increase in tax" or in the case of imposition of fresh tax on account of the implementation of the GST, it said.

"The original MRP shall continue to be displayed and the revised price shall not overwrite on it," the notification said.

Fore reducing the MRP, a sticker of revised lower MRP (inclusive of all taxes) may be affixed and the same shall not cover the MRP declaration made by the manufacturer or the packer or importer on the label of the package.

The notification also said that the packaging material or wrapper which could not be exhausted prior to 1 July may be used for packing of material till 30 September 2017, or till such date the packing material or wrapper is exhausted, which ever is earlier.

This will be permissible after the manufacturer or importer or packer makes correction in the retail sale price on account of the GST implementation by way of stamping or putting sticker or online printing.

The government notification has come in a bit too late and there is reason for the retailers feel betrayed.

The retailers have been on a price cutting spree to sell off the stocks they have as they were unclear about the post-GST scenario. The GST Council had taken the decision on the way ahead for transitioning much late, just ahead of the roll-out date.

"If we would have known this earlier, the industry could have planned the transition better," says Videocon chief operating officer CM Singh in a report in The Economic Times.

According to him, the pressure on the retailers to sell off old stock would not have been so much. Even the primary sales from manufacturers would not have got impacted as much, had there been this plan earlier.

However, the decision has come as a relief to companies, according to tax experts.

"This is a welcome relief for the industry. However, while increasing the MRP, it needs to be ensured that benefit of deemed credit is appropriately factored in," Pratik Jain of PwC has been quoted as saying in the ET report.

With PTI inputs

Updated Date: Jul 05, 2017 08:43 AM

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