The Indian indirect tax system is about to see a major transformation. The controversial anti-profiteering provisions under Section 171 of the Central Goods and Services Tax Act, 2017 simply expired on March 31, 2025, with the GST 2.0 coming into effect. For nearly eight years, businesses were under the constant lens of the National Anti-Profiteering Authority (NAA) and, later, the Competition Commission of India (CCI), whenever there was a change in GST rates.
As of April 2025, however, the scene shifts dramatically. Rather than a statutory enforcer committed to anti-profiteering, companies themselves will have to turn to consumer protection legislation, competition law, and Legal Metrology rules for direction. And as government circulars and court rulings in recent times reveal, the expectations are still exacting: the gain of a GST cut must go to the consumer visibly.
Let’s extract the changing framework into actionable takeaways, based on the Department of Consumer Affairs (DoCA) Circular of 9 September 2025, the Legal Metrology (Packaged Commodities) Rules, 2011, and court precedents like Reckitt Benckiser India Pvt. Ltd. v. UOI (Delhi High Court, 2024). This article will answer all your questions relating to MRP Revision after GST Rate Cut.
The End of Section 171 Monitoring: But Not of Responsibility
The anti-profiteering framework under Section 171 was introduced with GST itself in 2017. Its purpose was simple in theory: if the tax rate on a product or service goes down, or if input tax credit is made available, businesses must reduce their prices “commensurately.”
In practice, however, this gave rise to years of disputes, with companies accused of profiteering for failing to cut prices exactly in line with tax reductions. From FMCG giants to real estate developers, the NAA pulled up hundreds of entities. Many of these cases lingered in courts.
Now, the sunset clause is here. After 31 March 2025, both the NAA and the CCI will no longer hear anti-profiteering matters. However, that does not mean businesses can disregard GST price compliance.
The Delhi High Court’s ruling in Reckitt Benckiser (2024) clearly illustrates this principle. Transferring of the advantages of tax cuts to consumers is a component of the larger ecosystem for consumer rights and goes beyond the GST requirement. This principle will be upheld by the Competition Act of 2002, the Consumer Protection Act of 2019, and above all the Legal Metrology Act of 2009.
Immediate MRP Revision Is Mandatory
One of the clearest obligations under GST 2.0 is the immediate revision of MRPs on packaged goods as the tax rates change. The DoCA Circular of 9th September 2025 leaves no room for any sort of confusion:
- Manufacturers, importers, or packers need to stick revised MRPs immediately, whether in the form of stickers, stamping, or reprints.
- The old MRPs need to visible as well. Not over-written in any way.
- Furthermore, they also need to promote the alteration in not less than any two newspapers.
- Delay can invite punitive action, not just under Legal Metrology Rules but also under the Consumer Protection Act of 2019 as an unfair trade practice.
For companies, this implies that compliance teams need a standard procedure to update MRPs the instant GST Council notifications make a change in rates. It’s not a choice. It’s now a compliance requirement
Sector-Specific Sensitivities: Pharmaceuticals on High Alert
Some industries are subject to more stringent regulations. Pricing in pharmaceuticals is already governed by the National Pharmaceutical Pricing Authority (NPPA) and the Drugs (Prices Control) Order, 2013 (DPCO).
The Supreme Court’s decision in Glaxo SmithKline Pharmaceuticals Ltd. v. UOI held that reduced prices must be applied uniformly across all batches of drugs, not selectively. When GST rates fall on medicines, manufacturers must immediately update labels and ensure compliance across distribution networks.
This industry is closely watched by the NPPA, and noncompliance can result in harsh sanctions, such as the recovery of overcharged amounts plus interest.
Handling Unsold Stock
A frequent question for businesses is: What about stock already in the market with old MRPs?
The Legal Metrology Rules allow for practical solutions. If the GST rate is reduced, a revised MRP sticker can be affixed on the package, showing both the old and new MRPs. For a tax hike, the higher revised MRP may be shown, but the original price must remain visible, and the increase cannot exceed the actual tax increase.
The DoCA has gone a step further by allowing transitional flexibility until 31 December 2025. Where relabelling is impractical, dual price declarations (original and revised) may continue until stock is cleared.
The principle, however, is non-negotiable: consumers must never pay more than the reduced MRP after a tax cut, and they must not be overcharged beyond the precise tax hike when rates rise.
Profiteering Without the NAA?
A natural question arises: with the anti-profiteering authority gone, what happens if businesses simply pocket the GST benefit?
Here’s where other laws step in.
Consumer Protection Act, 2019: Failure to pass on tax benefits may be treated as an unfair trade practice or a misleading advertisement, both punishable offences.
Competition Act, 2002: If large players abuse dominance by unjustly enriching themselves through non-passage of tax benefits, the CCI can act (until March 2025, it remains the adjudicating body for profiteering complaints).
Legal Metrology Act, 2009: Incorrect MRPs invite fines up to ₹25,000 for the first offence and even imprisonment for repeated violations.
In other words, enforcement will not vanish, but it will merely be reframed.
Practical Scenarios Businesses Must Watch Out For
- Regardless of any such terms of the contract, invoices raised post rate cut must compulsorily reflect the lower tax.
- E-commerce platforms: The Consumer Protection (E-Commerce) Rules, 2020, imposes liability on platforms that display inaccurate MRPs. In order to avoid joint liability for deceptive pricing, they must make sure that their sellers update their MRPs.
- Grammage or quantity increases: Courts have accepted increased product quantity as a valid way to pass on GST benefits, provided it is transparent. However, this is only permissible for new stock only and not for relabelling unsold inventory already in the market.
- Discounts: Offering a discount instead of revising MRPs is not acceptable for pre-packaged goods. Only relabelling ensures transparency. Discounts may be used for non-packaged goods like cars or white goods.
- Exports: Export packs are zero-rated and outside the Legal Metrology regime, so MRPs need not be revised. But export pricing contracts may still need adjustments.
Judicial Precedents to Remember
Two judgments mainly stand out in context of the new rules:
Reckitt Benckiser India Pvt. Ltd. v. UOI (Delhi HC, 2024): Held that the entire benefit of tax reduction must flow to consumers; unjust enrichment is impermissible. Also emphasised that anti-profiteering proceedings must be initiated within a reasonable time delay of 4–5 years are unreasonable.
Glaxo SmithKline Pharmaceuticals Ltd. v. UOI (Supreme Court): Reinforced that reduced prices must apply uniformly, especially in pharmaceuticals.
These cases will continue to influence how courts view profiteering complaints under consumer and competition law, even after GST 2.0.
Key Takeaways for Businesses
- Be proactive, not reactive: Create an internal compliance mechanism to track GST Council rate changes and revise MRPs the same day.
- Maintain dual MRPs transparently: Never overwrite old MRPs and always show both.
- Advertise responsibly: Price reductions can be publicised, but never misrepresented as larger than they are.
- Document everything: Keep records of revised labels, invoices, and advertisements to defend against complaints.
- Train staff: Sales, marketing, and legal teams must all be aware of their roles when rates change.
Conclusion
The sunset of Section 171 marks a symbolic shift in GST enforcement. No longer will businesses face a dedicated anti-profiteering tribunal scrutinising every price cut or lack thereof. But in reality, the responsibility to pass on GST benefits is not going away, it is being absorbed into broader consumer and competition law frameworks.
For businesses, this may actually be an opportunity. Compliance, if handled transparently and promptly, can be turned into a goodwill exercise with consumers. Voluntary announcements of revised prices can build trust at a time when regulatory eyes remain sharp.
In short, GST 2.0 is not just a tax reform; it is a test of business integrity. And the smartest businesses will see compliance not as a burden, but as a chance to strengthen their bond with consumers.
