Govt clears MRP fixes for unsold FMCG inventory after GST rate change

The Centre has permitted manufacturers, packers and importers of pre-packaged commodities to revise the maximum retail price (MRP) on unsold stocks until December 31, following recent changes in goods and services tax (GST) rates.

The GST Council has revised rates of a range of fast-moving consumer goods (FMCG), effective from September 22, reducing them from 12 per cent or 18 per cent to 5 per cent. This has created a logistical challenge for companies, as packaged items already produced now require price adjustments.

A notification issued by the Department of Consumer Affairs states that companies can declare the revised MRP until December 31, 2025, or until the old stocks are cleared, whichever comes earlier. The revised MRP may be applied through stamping, stickers or online printing, as appropriate. However, the original MRP must continue to be displayed and cannot be overwritten. The difference between the old and revised price should reflect only the actual increase or reduction in tax due to the GST changes.

Manufacturers, packers or importers have also been asked to publish at least two advertisements in one or more newspapers and circulate notices to dealers, the Director of Legal Metrology in the central government, and the Controllers of Legal Metrology in states and Union Territories, to inform about the price changes.

The order further clarifies that unused packaging material or wrappers printed with the old MRP can still be used until December 31, provided the corrected price is declared through stamping, stickers or online printing.

Saurabh Agarwal, tax partner at EY, said the government’s decision was a timely move.

This measure provides dual benefits: It ensures that consumers are transparently informed of revised prices while helping industries avoid large-scale wastage of packaging material, added Saurabh Agarwal, tax partner at EY. “From an industry perspective, this extension till December 31, 2025, provides much-needed operational flexibility, particularly for FMCG, pharmaceutical and other sectors with large packaging inventories. It allows companies to reuse existing packaging material, thereby reducing raw material costs while ensuring adherence to regulatory compliance.”

Executives in the FMCG sector welcomed the deadline, saying it gives them adequate time to avoid destroying packaging material, as many companies are holding two to three months of packaging inventory. Two executives, who requested anonymity, noted that the challenge lies in tracking stocks across the supply chain and updating prices, as dedicated manpower is needed to make these adjustments.