On account of implementation of GST there may be instances where the retail sale price of a pre-packaged commodity is required to be changed. Department of Consumer Affairs has therefore issued an advisory on the matter.

Further, vide this advisory it has been informed inter alia, that for reducing the Retail Sale Price (MRP), a sticker with the 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, as the case may be, on the label of the package, which includes the packed water bottles also.

The said information has already been disseminated to all the Controllers of Legal Metrology of all States/ UTs for immediate necessary action.

Further, Section 171 of the GST Act provides that:

(1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.

(2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

This information was given by Shri C. R. Chaudhary, the Minister of State for Consumer Affairs, Food and Public Distribution, in a written reply to a question in Rajya Sabha.

Pass-through of tax reduction: sellers must pass GST rate or input credit benefits to consumers through lower prices. Implementation of GST requires sellers to adjust retail prices where tax incidence changes. Consumer Affairs advises that reduced MRPs may be shown by affixing a sticker with the revised lower MRP inclusive of taxes, provided the sticker does not cover the manufacturer's original MRP declaration; this has been circulated to Controllers of Legal Metrology. Section 171 of the GST law mandates that reductions in tax rates or benefits of input tax credit be passed on by way of a commensurate reduction in prices, and empowers the government to constitute an authority to examine compliance.