The maximum selling price printed on packaged goods in India
MRP stands for Maximum Retail Price, the highest price at which a packaged product can be sold to the end consumer in India. It is regulated under the Legal Metrology Act, 2009, and the Legal Metrology (Packaged Commodities) Rules, 2011. Every manufacturer or packer is required to print the MRP on the product packaging, inclusive of all taxes (including GST). No retailer or dealer is allowed to sell any packaged product above its MRP — doing so is a punishable offence. However, selling below MRP is perfectly legal and is how retailers earn different margins based on their purchase price. MRP includes the cost of production, profit margins of the manufacturer, distributor, and retailer, transportation costs, advertising expenses, and applicable taxes. For Indian businesses, understanding MRP is important because it sets the ceiling price for retail sales, helps consumers compare prices across shops, and forms the basis for calculating trade discounts in the distribution chain. Many FMCG, pharma, and consumer goods businesses in India operate entirely on an MRP-based pricing model.
You run a grocery store in Pune and purchase a pack of biscuits from a distributor at Rs. 38 per pack. The MRP printed on the pack is Rs. 50. You can sell it at any price up to Rs. 50 but not above. If you sell at Rs. 45, your margin is Rs. 7 per pack (Rs. 45 - Rs. 38). During a festive sale, you might sell at Rs. 40 to attract customers, earning Rs. 2 per pack. The distributor's price to you already accounts for the manufacturer's margin and distribution costs within the Rs. 50 MRP.
No, selling any packaged commodity above its MRP is illegal under the Legal Metrology Act, 2009. Violators can face fines and penalties. However, this rule applies to pre-packaged goods only — loose items, restaurant food, and custom-made products are not covered by MRP regulations.
Yes, MRP is inclusive of all taxes including GST. When you sell a product at MRP, the GST is already included in that price. On your sales invoice, you need to back-calculate the taxable value by removing the GST component from the MRP. For example, if MRP is Rs. 118 and GST is 18%, the taxable value is Rs. 100.
Yes, selling below MRP is completely legal and is common practice. Retailers often sell below MRP during sales, clearance events, or to match competition. The difference between your purchase price and selling price (which is at or below MRP) is your margin.
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