Understanding Maximum Retail Price

The Government of India describes maximum retail price (MRP) as the final amount for a specific listed item. India applies certain taxes based on the MRP instead of the actual item price. MRP is the final price; therefore, all MRP taxes or MRP inclusive adjustments do not have an impact on the MRP.

MRP also applies when a sales tax is not charged separately on an invoice but, instead, the price includes the sale tax. The seller must calculate the sale tax and include it in the price if items or goods are subject to MRP. For goods covered under the Packaging and Commodities Act, the MRP must be fixed and stamped on the packets. This is common in trading organizations when goods are subject to retail sales and sold to customers or consumers who are the final purchasers of the product. MRP can also apply to manufacturing organizations in specific cases.

You can set up the MRP amount based on any combination of item and customer group. The Tax Rules Setup program (P75I072) enables you to set up the MRP amount by tax rule name. You set up the MRP amount to enable the system to calculate MRP excise and sales taxes. This example shows the setup of the MRP amount in the Tax Rules Setup program:

Tax Rule Name	Description	Tax Rule Type	Rule Percentage	Rule Value	Notification Number
ABAT40	Abatement 40%	Abatement	40		12345
ABAT30	Abatement 30%	Abatement	30		56789
MRP123	MRP for item 123	MRP		15000

You can use the abatement rules in the table with or without the MRP rule. The system enables you to use MRP in different ways.