GST 2.0: Manufacturers can affix revised prices on existing packaging to reflect rate changes

To ease at least some of the transition troubles for companies after the goods and services tax (GST) rate were cuts, the government has now permitted manufacturers, packers, and importers to use existing packaging material by affixing revised prices to reflect the GST rate changes and the revised pricing.

Through a circular, the Ministry of Consumer Affairs has extended this facility to manufacturers, packers and importers of pre-packaged goods for unsold stock or inventory with them till September 22, when the new GST rates will come into effect. The facility will be available up to December 31, 2025, or until the existing stock is exhausted, whichever is earlier.

“Declaration of the changed retail sale price (MRP) shall be made by way of stamping or putting sticker or online printing,” said the circular issued by the department of legal metrology under the consumer affairs ministry, adding that the original MRP shall continue to be displayed and the revised price shall not overwrite on it.

It has also said that the difference between the retail sale price originally printed on the package and the revised price shall not, in any case, be higher than the extent of increase in the tax, if any, or in the case of imposition of fresh tax, such fresh tax, on account of implementation of GST Act and Rules. “In the case of reduction of tax, the revised price shall not, in any case, be higher than the extent of price after reduction of tax, if any,” it has said.

Manufacturers or packers or importers shall make at least two advertisements in one or more newspapers in this regard and by circulation of notices to the dealers and to the Director of Legal Metrology in the Central Government and Controllers of Legal Metrology in the States and Union Territories, indicating the change in the price of such packages.

The move is expected to come as a relief to manufacturers and retailers on how to re-sticker or reprint the changes in prices following the GST rate changes. While the rate changes are recommended by the GST Council and notified by the Union finance ministry and state tax departments, the department of legal metrology has to issue a notification to permit retailers to update the maximum retail price (MRP) on unsold goods and inventories.

Experts noted that the move is very timely and provides dual benefits as it ensures that consumers are transparently informed of revised prices, and also helps industries avoid the large-scale wastage of packaging material.

“From an industry perspective, this extension till December 31, 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 at the same time ensuring adherence to regulatory compliance,” said Saurabh Agarwal, Tax Partner, EY, adding that it brings much-needed relief and clarity to the industry on the use of existing packaging material, easing cost pressures and enabling timely action through a proactive approach.

Following the rate rationalisation exercise by the GST Council under which taxes on over 450 items were changes that will be effective September 22, the government has been working on a massive exercise to ease transition and implementation issues. An inter-ministerial meeting was also help by Cabinet Secretary TV Somanathan to ensure timely roll out of the new rates.