What is the full form of MRP?
MRP full form is MRPMaximum Retail Price.
The maximum retail price is the upper limit of the price of the commodity set by the manufacturer or distributor for retailers or final point-of-sale transactions. To quote in simple words, it is the highest charge that a seller can take from you for that particular product.
The product manufacturer calculates and fixes the highest price after including all taxes imposed on the product.
How is MRP being used?
Maximum Retail Price is used in various ways which we will discuss below:
- All products retailed in India must be MRP marked.
- In most cases, stores generally charge a lower cost than the desired retail price based on the actual wholesale price of each product purchased in bulk. With these systems, the manufacturer cannot legally enforce the calculated price as recommended.
- In some remote areas of tourist destinations or areas with a lack of a particular product, the retailer may charge you more than the MRP, but that’s not legal.
Why is MRP being criticized?
Maximum Retail Price is being criticized because of some important reasons like being incompatible with free-market and due to the following reasons:
- The MRP concept has been criticized as being incompatible with the free-market system. As it involves manufacturers who determine the profits that retailers will get.
- You can easily bypass the MRP by charging a “service” charge on top of the item price. For example, a “cooling charge” for cold drinks, or by asking manufacturers to apply a big MRP.
- India and Bangladesh do not have a List price but only a maximum retail price.
What Are The Steps To Take As A Consumer When Retailers Charge More Than MRP For A Product?
There are some steps that consumers can take when they are charged more than the MRP:
- The central government of India has set up the National Anti-profiteering Agency to verify whether the ITC is provided by a registered person or whether the reduction in the tax rate results in the price reduction and the same is delivered to the customers. This makes sure that prices stay under control and that companies do not capture excess profits.
- When a retailer charges GST on top of the maximum retail price, customers have a right to file a complaint. Customers can file a complaint with the ministry or with various Anti-Profit Boards established in India. Retailers cannot charge over the MRP. Although, a retailer can sell for less than MRP.
How to Explain MRP increase/decrease after GST?
We’ve put in simple words to explain MRP increase/decrease below:
- Since the enforcement of GST in July 2017, there have been some changes in the tax rate for a variety of products. This will affect the MRP for a product.
- Although, depending on the GST, taxpayers would not be able to claim the ITC. In situations like this, the price will not reduce. The ongoing revision of GST impositions and GST tax rates creates the need to revise the maximum retail price.
- For example, the price of FMCG products will be decreased after GST enforcement to pass on the advantages of GST price decrease and ITC advantages.