A products MRP is ₹100 with GST rate of 12%.
Now GST rate has been increased to 18% but MRP of the old stock is still ₹100.
Do trader has to take hit on his profit or can we change MRP or charge more than MRP in this situation ? How to deal this situation ?
Thanks & Regards
16 Replies
Deepanshu Garg
(Student)
(273 Points)
Replied 28 January 2024
@ sabyasachi
Please explain more. Also, if you know of any notification or case study, please share that as well.
Please explain more. Also, if you know of any notification or case study, please share that as well.
sabyasachi mukherjee
(27574 Points)
Replied 28 January 2024
Certainly send to sabyasachimukherjee7098 @ gmail.com
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 28 January 2024
There is a thing which shows up w.e.f (with effect from) date. So markup 18% on price.
You can also use this opportunity to offer discount. For the inventory procured before the GST change. Eg. Use rate 12% and sell cause it's not clearly mentioned as how prices must change
CA Rashmi Gandhi
(Chartered Accountant)
(86323 Points)
Replied 28 January 2024
Just charge extra 6% on cost
Deepanshu Garg
(Student)
(273 Points)
Replied 28 January 2024
@ CA Rashmi Gandhi
Before rate change I was selling it for ₹100 ie for full MRP.
Now, after rate change how can I sell it above MRP ? How will a customer agree to purchase above MRP ?
Before rate change I was selling it for ₹100 ie for full MRP.
Now, after rate change how can I sell it above MRP ? How will a customer agree to purchase above MRP ?
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 28 January 2024
Sorry your a student and I didn't notice
100x118/100
Does anyone know if we can sell the old inventory for 12%
Deepanshu Garg
(Student)
(273 Points)
Replied 28 January 2024
@ Yasaswi
Earlier I was collecting ₹100 from customer & paying (100 X 100 ÷ 112) i.e. 10.70 as GST.
Now, I am still collecting ₹100 from customer (as 100 is MRP) but now I have to pay (100 X 100 ÷ 118) i.e. 15.25 as GST.
I am unable to pass the extra GST to customer because of MRP. So, this means I have to bear the burden of extra GST (₹4.55).
So, this extra ₹4.55 I have to pay from my pocket.
This is my concern that due to MRP I am unable to pass the extra GST burden to customer & have to pay it from my own pocket. So, basically I have to forego my profit margin in this case.
How to solve this situation ?
Earlier I was collecting ₹100 from customer & paying (100 X 100 ÷ 112) i.e. 10.70 as GST.
Now, I am still collecting ₹100 from customer (as 100 is MRP) but now I have to pay (100 X 100 ÷ 118) i.e. 15.25 as GST.
I am unable to pass the extra GST to customer because of MRP. So, this means I have to bear the burden of extra GST (₹4.55).
So, this extra ₹4.55 I have to pay from my pocket.
This is my concern that due to MRP I am unable to pass the extra GST burden to customer & have to pay it from my own pocket. So, basically I have to forego my profit margin in this case.
How to solve this situation ?
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 28 January 2024
Sorry about that I was thinking about net of sales amount. That amount you can't do anything. You must must budget your product to meet the profit margins. That's why I'm also asking if it is possible to sell finished goods at 12% but label it as 18%?
89.30/- old NSV
84.75/- new NSV
Show 4.55 as discount. But however it's not possible because I guess you'll have 10/- profit on this product. So rebudget your prices immediately
Deepanshu Garg
(Student)
(273 Points)
Replied 28 January 2024
I read somewhere that we can use two MRP's in such cases. This happened when GST was first introduced.
I just want to know if this is true & if there is any such kind of provision ?
I just want to know if this is true & if there is any such kind of provision ?
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 28 January 2024
Ok got it when prices lowered we can show discount. Not when hiked up. Good luck
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 28 January 2024
https://cleartax.in/s/gst-rate-changes-can-businesses-ca-deal
This article explains how to cope with price changes. It's definetely useful in your situation. If it doesn't help if you don't have accruals, then change your product price
sabyasachi mukherjee
(27574 Points)
Replied 28 January 2024
Ok after rate change obviously at full mrp
Ar Rahman
(48 Points)
Replied 29 January 2024
A change in the rate of tax can impact the Maximum Retail Price (MRP) by either increasing or decreasing the overall cost of the product for consumers. If the tax rate increases, the MRP may go up, and if the tax rate decreases, the MRP might decrease, assuming other factors remain constant. Manufacturers and retailers often adjust prices to reflect changes in tax rates.
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