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The GST Council's 56th meeting on 3 September 20251 introduced one of the most significant rounds of rate revisions since the tax's inception. Essentials like milk, paneer, nuts, chocolates, and biscuits saw GST rates drop sharply, while aerated drinks, caffeinated beverages, and tobacco products moved up to a steep 40 percent slab. The reform narrative was straightforward: relief for the average household, higher tax for goods deemed socially harmful, and a rationalisation of industrial inputs.
However, tax reform is never confined to tax alone. The Legal Metrology (Packaged Commodities) Rules, 2011 (LMPC Rules) mandate that every Maximum Retail Price (MRP) printed on packaging must be inclusive of all taxes. Any change in GST therefore compels a revision of MRPs, making GST a driver of compliance not just for finance teams but also for manufacturers, packers, and importers managing packaged commodities.
To ease this transition, the Department of Consumer Affairs issued a notification on 9 September 2025, permitting revisions to MRPs of unsold stock manufactured, packed, or imported before the GST changes came into effect. This relief is available until 31 December 2025.
GST Rate Shifts Relevant to Packaged Commodities
The table below captures the headline changes most likely to affect packaged consumer goods:
|
Category |
Earlier GST Rate |
Revised GST Rate |
|
Dairy (milk, butter, cheese, paneer) |
12% / 5% |
Nil / 5% |
|
Nuts, dried fruits |
12% |
5% |
|
Chocolates, biscuits, confectionery |
12%–18% |
5% |
|
Aerated and caffeinated drinks |
28% |
40% |
|
Tobacco products (except bidis) |
28% |
40% |
|
Cement and coal |
28% / 5% |
18% |
For every entry in this table, there is a corresponding obligation to ensure the new tax element is reflected in the MRP.
Why LMPC Declarations Intersect with GST
Rule 6 of the LMPC Rules requires the MRP to be inclusive of all taxes. The definition leaves little discretion: once GST changes, the printed MRP cannot remain static.
Two quick illustrations show how direct this link is:
- Reduction scenario: A box of biscuits earlier priced at ₹50 with 18% GST will now attract only 5%. The tax element drops by about ₹6. If the MRP is not adjusted, the manufacturer risks both anti-profiteering action under GST law and penalty under LMPC.
- Increase scenario: A soft drink sold at ₹60 under 28% GST will now face 40%. The revised MRP must reflect the additional tax burden, but it cannot exceed the actual increase arising from GST.
The Legal Metrology regime thus becomes the enforcement arm that ensures consumers see the effect of tax policy in the marketplace.
The September 2025 Notification2
The Ministry's notification dated 9 September 2025 creates a framework for handling unsold stock without forcing businesses into wasteful recalls or repackaging. The relief is not unconditional but tied to safeguards that protect consumers.
|
Condition |
Legal Intent |
|
Revised MRP may be declared throughstamping, stickering or online printing |
Allows exhausted stock to remain saleable without breaching LMPC |
|
Original MRP must remain visible |
Ensures consumers can see both the old and the revised prices |
|
Extent of revision must mirror actual GST change |
Prevents businesses from using GST as a cover for arbitrary hikes |
|
Manufacturers, packers, or importers must issue at least two newspaper advertisements and notify dealers and regulators |
Creates public record and transparency |
|
Existing packaging material may be useduntil 31 December 2025, provided corrections are made |
Minimises wastage while respecting compliance deadlines |
The notification is therefore less a relaxation and more a structured compliance bridge, balancing industry logistics with consumer rights.
Legal Consequences of Non-Compliance
The compliance stakes are high. Three different legal regimes converge here:
- Legal Metrology Act, 20093: Incorrect or missing declarations can attract fines up to ₹25,000, and repeated offence can lead to criminal prosecution against the Director of the company.
- GST Law: Section 171 of the CGST Act requires that tax benefits flow to consumers. Non-passing of benefits can invite anti-profiteering proceedings.
- Consumer Protection Act, 2019: Inflated or misleading MRPs can be challenged as unfair trade practices4.
Together, they make pricing declarations after a GST reform one of the most closely scrutinised aspects of packaged commerce.
Concluding Note
The September 2025 GST reforms were presented as a fiscal exercise, but their immediate impact is felt in the supermarket aisle and on the packaging line. By linking MRP declarations with tax changes, the Legal Metrology framework ensures that consumers directly experience the effect of policy.
For businesses, this means GST reforms cannot be treated as a back-office accounting issue. They cascade into packaging, logistics and consumer perception. The September notification provides breathing room, but only until December. Firms that move quickly to align declarations will not just avoid penalties; they will also demonstrate transparency in a market where consumer trust is increasingly shaped by compliance.
Footnotes
3. Section 36, LM Act, 2009https://www.indiacode.nic.in/bitstream/123456789/4892/1/legalmetrology_act_2009.pdf
4. Section 2(47)(i)https://ncdrc.nic.in/bare_acts/CPA2019.pdf
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