Stock and manufacturing glossary
MRP
Maximum Retail Price, or Material Requirements Planning
In India, MRP usually means Maximum Retail Price, the highest price, including all taxes, at which a packaged product may be sold to a consumer. In manufacturing, MRP also means Material Requirements Planning, which works out what materials to buy or make, and when.
Maximum Retail Price
Pre-packaged goods sold at retail in India must carry a declared retail sale price, shown as the MRP “inclusive of all taxes”. It protects consumers from being overcharged, and it fixes the ceiling for every seller in the chain. Retailers can sell below it; nobody can sell above it.
For your business, the MRP matters in three places: the price you print or receive on the pack, the discount you give to dealers and retailers from it, and the GST inside it.
How GST sits inside the MRP
Because the MRP includes GST, a sale at MRP means backing the tax out of the price rather than adding it on top. For an item taxed at 18%:
| At MRP | At 10% below MRP | |
|---|---|---|
| Price charged | ₹590 | ₹531 |
| Taxable value (price ÷ 1.18) | ₹500 | ₹450 |
| GST | ₹90 | ₹81 |
| Within the state: CGST + SGST | ₹45 + ₹45 | ₹40.50 + ₹40.50 |
When GST rates change, as many did on 22-09-2025, the tax inside the same MRP changes too, so check item rates and printed prices together.
Material Requirements Planning
In a factory, MRP is the planning method that turns a production plan into purchase and production orders. Take an order for 200 chairs, each needing 4 legs: you need 800 legs. With 300 in stock and 100 already on order, you must buy or make 400 more, and order them early enough to arrive before production starts. Done for every component and every order, this is material requirements planning; it depends on accurate BOMs, stock and lead times.
Common mistakes
- Adding GST on top of the MRP. Doing so charges the consumer more than the MRP.
- Treating MRP as the taxable value. GST is on the actual price, and the MRP already includes it.
- Old MRPs after a rate change. Keep item rates, labels and billing prices consistent.
- Planning without lead times. Material requirements planning is only as good as the delivery times and stock figures you give it.
Questions about MRP
Can a shop sell a product above its MRP?
No. Under the Legal Metrology rules for packaged commodities, the MRP is the maximum price at which the product may be sold to a consumer, inclusive of all taxes. Charging more is an offence.
Is GST charged on the MRP or on the selling price?
On the price you actually charge. The MRP already includes GST, so a sale at MRP carries the tax inside it, and a sale below MRP carries less tax.
How do I work out GST from an MRP?
Divide the price by 1 plus the GST rate to get the taxable value. At 18%, a price of ₹590 divided by 1.18 gives ₹500 taxable value and ₹90 GST.
What is material requirements planning in simple words?
Working back from what you must make, using the bill of materials, to how much of each material you need, how much you already have or have on order, and when you must buy or make the rest.
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