Government Allows Revision of MRP on Unsold Stock Amid GST Rate Changes

The Indian government has permitted manufacturers, packaging firms, and importers to revise the Maximum Retail Price (MRP) of unsold stock to reflect the recently announced GST reforms. The revision will be allowed until 31 December 2025 or till stocks last—whichever is earlier.

Transparency in Price Revision

Union Minister for Consumer Affairs, Food, and Public Distribution, Pralhad Joshi, clarified that the revised prices must reflect only GST changes. Importantly, the old MRP must remain visible on the packaging.

Any increase or decrease in price should directly correspond to GST rate revisions, ensuring that companies do not exploit the reform to arbitrarily increase prices. This safeguard, Joshi stated, is aimed at transparency and protecting consumer interests.

Guidelines for Implementation

According to the Ministry of Consumer Affairs notice:

  • The new MRP can be stamped, stuck, or printed on the packaging.

  • Overwriting is not allowed; the original MRP must remain visible.

  • Manufacturers, packers, and importers can continue using existing packaging material or wrappers until 31 December 2025 or till stocks last.

  • Companies are required to publish two advertisements in one or more newspapers to inform consumers about the revised MRP.

This mechanism prevents wastage of packaging material and ensures consumers are informed of changes.

GST Reforms and Price Impact

On 4 September 2025, India announced sweeping reforms in the Goods and Services Tax (GST) structure, reducing the slabs from four to essentially two:

  • 5% GST for essential goods (including most packaged food and FMCG items)

  • 18% GST for discretionary goods

  • 40% GST for luxury and “sin” goods

As a result, most fast-moving consumer goods (FMCG) will require packaging price revisions to reflect the reduced GST rate.

Industry Perspective

According to Saurabh Agarwal, Tax Partner at EY, the move offers dual benefits:

  1. Consumers remain informed about revised prices.

  2. Industries avoid large-scale wastage of packaging materials.

Agarwal added that the extension provides “much-needed operational flexibility” for sectors like retail and pharma, which typically maintain large packaging inventories. It also helps industries cut costs by reusing existing packaging material while staying compliant with regulations.

Stock Market Reaction

The announcement of GST reforms and the government’s flexibility on MRP revision contributed to positive market sentiment.

On Monday morning trade (11:15 am):

  • The BSE Sensex rose 0.27% to 81,002.52 points.

  • The NSE Nifty 50 gained 0.25% at 24,835.80 points.

  • Seven of 16 major sectors advanced, with IT stocks leading the rally.

The Nifty IT Index surged 2.3%, driven by a 4% jump in Infosys shares after the company announced plans to consider a share buyback on 11 September. IT firms accounted for 85% of Nifty’s total gains for the day.

Analysts said GST cuts, coupled with hopes of a US Fed rate cut, provided stability to the markets despite global uncertainties arising from US tariffs.

Conclusion

The government’s decision to allow MRP revisions until December 2025 strikes a balance between consumer protection and industry flexibility. While ensuring transparency for buyers, it also reduces operational costs for businesses, particularly in FMCG, retail, and pharma.

Alongside the GST rate overhaul, this measure is expected to stimulate domestic demand, improve compliance, and stabilize market sentiment, making it a significant reform step in India’s consumption-driven economy.


Location: Pune, Maharashtra, India

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