Soham was looking forward to setting up his store – he felt his was a convenient location for local residents to buy their groceries, and he hoped to do good business. His friends had often complained about shops that charged above Maximum Retail Price (MRP) and he set out to learn more about MRP.
He learnt that MRP refers to the price at which the product ‘shall be sold in the retail market; this price shall include all taxes levied on the product.’
Printing of MRP
The Legal Metrology (Packaged Commodity) Rules, 2011 under the Legal Metrology Act, 2009 requires compulsory printing of MRP on all packaged commodities.
Goods sold in e-commerce transactions are also required to carry the MRP, in addition to other details like manufacturer’s, packers and importer’s names and addresses, commodity name, net content, consumer care number, etc.
Medical devices, listed under the Drugs and Cosmetics Act, like valves, syringes, etc. are also required to compulsorily state the MRP and other compulsory declarations.
He learnt that the same product cannot carry two different MRP and that the font size for the product label is prescribed to enable ease of reading for the consumer.
The State’s Legal Metrology department is entrusted the responsibility of checking if products are being sold at a rate higher than MRP.
The Ministry of Consumer Affairs, Food and Public Distribution notified an amendment to Legal Metrology (Packaged Commodity) Rules, to come into force from October 1, 2022 which includes the following:
The declaration of retail sale on the packaging is to be provided in Indian currency; (particularly relevant to imported goods).
The unit sale price is to be declared on the package, eg ‘Rs___ per g’ for pre-packaged commodities having a net quantity of less than one kg’ or ‘Rs ___ per kg’ for pre-packaged commodities having a net weight of one kg or more. Similar unit sale price declarations are to be made for commodities sold by number, length or volume.
The Goods and Services Tax (GST) is the tax framework to be considered for traders.
Soham learnt that if GST is charged on the net MRP, arrived at after giving a discount on the product; it would amount to collecting ‘extra GST’ and thus, ‘Double Taxation’. In Goa, if the seller asks for a price higher than the stated MRP, the consumer can refuse to pay the price and make a complaint against the seller to the office of the Commissioner of Goods and Service Tax.
Soham was aware that the Consumer Protection Act, 2019 provided the consumer rights framework, which included the right of a consumer to be protected from unfair trade practices by providing true information about the quality, quantity, potency, purity, standard and price or goods and services.
Consumers can approach the consumer commissions under this Act in case of overcharging by sellers.
Soham realized that while the MRP system provided information and a reference point to the consumer, it had certain challenges. MRP applies to packaged commodities and not to services. Also non-packaged essential commodities are not required to adhere to MRP. Sometimes, even packaged commodities were sold at a price higher than MRP, eg at tourist locations, airports, railway stations and movie theatres. Some shops charged for their service, eg ‘Cooling’ bottled drinks.
On occasions, manufacturers print an unreasonably high MRP, often resulting in the product being sold at a price that could be significantly discounted, thus creating confusion in the consumer’s mind about the ‘value’ of the product.
Soham had read about the practice of manufacturers fixing the Maximum Operating Price (MOP) and a Suggested Retail Price (SRP) or Recommended Retail Price (RRP). The MOP refers to the price at which the retailers buy products from the manufacturers while the SOP or RRP refers to the price at which the retailers can sell their products. He wondered if this could evolve a balance between the consumers’ needs and the retailers’ constraints. This would provide a reference point to the consumer as also the option to go to a different seller if s/he found the service level or price unacceptable.
Soham was keen to run his business in a manner aligned with the law and hoped that the regulatory system would support transparency in the conduct of business and pricing in a manner fair to, both, the consumer and the seller.
MRP refers to the price at which the product shall be sold in the retail market; this price shall include all taxes levied on the product
Printing of MRP on labels
Upcoming changes wef October 1, 2022