Telangana government tracks MRP ahead of GST to stop misuse

Hyderabad: The state government has alerted the commercial taxes department to keep an eye on manufacturers’ increasing maximum retail price ahead of the July 1 GST roll-out.

The GST Council has fixed the tax rates for all but a few goods and services, which brings down the tax incidence on several commodities, especially essential items.

The manufacturers have to reduce the MRP to reflect the lower tax levels and pass the benefit to consumers when the GST comes into being. “If manufacturers increase MRP now, what is the point in fixing lower tax rates in the GST,” finance minister Etela Rajendar said.

The government has directed the commercial taxes department to examine whether there are any changes in MRP on a day-to-day basis till GST is rolled out.

Mr Rajender said, “Such irregularities by manufacturers and traders will not be tolerated. Nearly 80 per cent of the commodities have been placed in the tax slab below 18 per cent. Besides, some essential commodities like milk, cereals and bread are in the zero tax category. This benefit has to be passed on to the consumers by reducing the MRP.”

Mr Rajender said the next meeting of the GST Council in June will discuss the issue of manufacturers hiking MRP in the run-up to the GST and take adequate measures to check the practice.

There is  a provision for the government to invoke an anti-profiteering clause in the GST and set up an anti-profiteering authority to ensure that companies pass on the benefit of tax reduction to customers.

There are reports of companies, especially those manufacturing fast moving consumer goods, jacking up prices. The anti-profiteering clause will ensure that companies do not indulge in such unfair pricing before the GST rollout.

The commercial taxes department has been tasked with randomly verifying the MRP of items every day and checking the bills issued by commercial establishments frequently to detect price variation if any.

The CGST law provides that the benefit of any reduction in the tax rate on any goods or service, or the benefit of input tax credit, should be passed on to the recipient (consumer) by way of a commensurate reduction in prices.