GST Council: No more GST on discounted items

By

Isabelle Crossley

Published
Nov 22, 2017

Following complaints that consumers were forced to pay extra taxes during sale season, the GST Council has stated that retailers are not allowed to charge GST after discounting the MRP of products.

Many apparel and footwear retailers have been charging Goods and Services Tax (GST) on items even after discounting the maximum retail price in sale season and this has led to customer complaints. After Ajay Jagga, a member of the Consumer Protection Council (CPC), Chandigarh, raised the issue, the National Consumer Disputes Redressal Commission, New Delhi, has decided that this will no longer allowed. The public notice for this decision is still to come but is expected soon.

“The huge boards of sale are normally seen at most of the branded shops of garments and footwear during changing season and they are indulging in practice where they write on their sale board 40% off, VAT extra. By putting such boards they are virtually misleading the public concerning the price at which a product or products are, ordinarily sold. They are indulging in unfair trade practice,” said Jagga.

 “Under the consumer laws the MRP is inclusive of GST, so whenever a discount is offered, it is on MRP, hence it is illegal to charge the GST, on the discounted price. The consumer forum and national commission has passed many orders terming the practice as unfair and imposed penalties but it is still continuing. The reason is that if one percent [of] customer goes to court, they won’t mind paying penalty. Now the need is that Consumer Protection Council should issue ban orders and enforce the same through Section 144 of CrPC to save consumers,” Jagga urged. Jagga’s demands were heard and, unlike under the Value Added Tax (VAT) regime, the GST Council has promised to put a stop to added tax to discounted items.