GST overhaul: Government permits revised MRPs on unsold stock; use of old packaging allowed till December

The government has allowed manufacturers, packers and importers of packaged goods to print revised MRPs on unsold stock under the new GST rules. They have further been allowed to exhaust existing packaging material and wrappers until December. The decision comes amid repeated appeals by consumer goods companies, which had urged the government to allow clearance of inventories with pre-printed MRPs at discounted rates once the revised GST structure takes effect on September 22. Industry players warned that otherwise packaging material worth over Rs 2,000 crore could go to waste. In letters sent via industry bodies to the finance ministry and department of consumer affairs, companies pointed out that they typically hold two to three months’ inventory across the supply chain, covering millions of items, Economic Times reported. “Majority of the packaging materials are pre-printed with the prevailing MRP.

In order to avoid colossal waste… manufacturers should be allowed to exhaust pre-printed material with existing MRP,” one letter had said. Executives said they were working on mechanisms to pass on the full benefit of the tax cuts. “While we intend to pass on the full tax cut benefits through lower pricing, we are working on how to implement it cost efficiently without wastage,” Mayank Shah, vice-president at Parle Products, told ET. Similarly, Amul flagged challenges in ensuring that reduced rates are immediately visible at the consumer level.

The dairy major said it would use advertisements and discounts to reflect the new prices even on older stock. The recent GST overhaul sharply reduced duties on most consumer goods. Taxes on butter, cheese and confectionery were cut from 12 per cent to 5 per cent, while chocolates, biscuits, cornflakes, coffee, ice-cream, bottled water, hair oil, soaps and toothpaste shifted from 18 per cent to 5 per cent. Essential items like detergents and certain cosmetics, however, remain at 18 per cent. Industry associations have also sought reintroduction of rounding off MRPs to the nearest rupee or 50 paise for billing simplicity, and recognition of promotional offers such as “buy one-get one” or increased grammage as valid ways of passing on GST benefits. Experts say the duty cuts on personal care and consumer goods will boost disposable incomes and spur demand in discretionary categories such as cosmetics and home care. Brands are expected to leverage the changes through value-driven offerings, smaller pack sizes and targeted outreach in emerging consumption hubs.