GlossaryMaximum Retail Price

MRP

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The highest price, inclusive of all taxes, at which a pre-packaged product may be sold to a consumer in India.

MRP is printed on pre-packaged goods sold in India under the Legal Metrology (Packaged Commodities) Rules, 2011. It is the maximum price a retailer can charge a consumer, and it includes all taxes. Selling above MRP is an offence; selling below it is allowed and common.

What else the label must show

Along with MRP, a pre-packaged consumer product carries the name and address of the maker or packer, the common name of the product, net quantity, month and year of manufacture, country of origin for imports, and a consumer care contact.

MRP and GST

GST is charged on the actual selling price. A shop that sells an item with MRP ₹118, inclusive of 18% GST, at ₹110 calculates the tax on ₹110:

Taxable value = ₹110 ÷ 1.18 = ₹93.22, GST ₹16.78.

MRP in the trade

Distributors and retailers usually work back from MRP. A brand fixes MRP, gives the distributor a margin, and the distributor passes a margin to the retailer. A retailer's "margin on MRP" is a different number from markup on cost, so it is worth knowing which one a scheme quotes.

MRP rules apply to goods packed for retail sale. Loose goods and goods packed for industrial or institutional buyers follow different labelling rules.

Nearby terms

All 60 terms

LedgerThe running record of every entry for one account, such as a customer, a supplier, a bank or an expense head.LUTA yearly undertaking filed on the GST portal that lets a business export without paying IGST.MarkupThe amount added to cost to arrive at the selling price, usually expressed as a percentage of cost.MSMEBusinesses classed as micro, small or medium by their investment in plant and machinery and their turnover.PANThe 10-character income tax number issued to every taxpayer, which also forms the middle of a GSTIN.PayablesMoney the business owes its suppliers for goods or services already received, also called creditors.

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