PRODUCT M.R.P PRICING FRAUDS IN INDIA! AN EXCLUSIVE REPORT BASED ON A SURVEY!

PRODUCT M.R.P PRICING FRAUDS IN INDIA!  AN EXCLUSIVE REPORT BASED ON A SURVEY!

The government proudly says that it has brought uniform GST rates all over India.

Fine. That is welcome.  A good step forward.

But, Is the Government aware that there is a silent exploitation of the consumers in India?

It is in the Product pricing!

In particular, Anomalies in M.R.P!

M.R.P means Maximum Retail Price.  That is, the product should not be sold beyond the rate mentioned as M.R.P. This price includes the cost of the product plus all taxes.

Of course, no one is selling beyond the M.R.P now because no consumer will buy paying more than the cost mentioned in the product.

But,  THE SELLING PRICE OF MANY PRODUCTS IS FAR LESS THAN M.R.P. EVEN 300-400% LESS THAN THE M.R.P.

I purchased a Laser Printer toner.  The price had been advertised as Rs.600/-.  When I purchased that product and noted the M.R.P, I was stunned to see the M.R.P mentioned as Rs.1990.

How a product priced as Rs.1990/- can be sold for just Rs.600/-?

Just last week, I bought a 100g pack of Chilli Powder of a popular brand in Tamilnadu.

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The price had been mentioned as Rs.32.  But, the retailer sold it for just Rs.20.

Today, I bought the same chilli powder from a shop situated in a remote residential area where it is the only shop for emergency purchases. The seller demanded Rs.31 for the same pack of 100g.

I told him that I bought the same pack for Rs.20 from the shop situated along the highway.  He told that he has reduced Rs.1 from M.R.P for me.

Like this,  so many products are sold in different prices in different shops while the MRP printed on the pack is high.

Many shops advertise 70%  or 80% offer.  I don’t know whether anyone offers 95% discount.

How is it possible for a seller to sell a product at 80 or 90% of discount?

What is the actual cost of the product?

What is the tax applicable?

What is the profit margin for the producer and seller?

Consider a product whose M.R.P is Rs.100.

If the discount is 80%, the cost works out to about 20% only.  That means, its actual cost is Rs.20.

In this Rs.20, all are included – Raw materials, production costs, taxes, margins for the producer, distributers, dealers, retailers, salaries for sales executives, etc.

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What does this mean?

If all costs and profits work out to just Rs.20, why do they mention the M.R.P as Rs.100?

If the chilli powder is sold in a shop for Rs.20, why do they mention the M.R.P as Rs.32?

They may say that a product produced in Tamilnadu will be sold in the same state for less price since the cost of transportation will be less, whereas, the same product should be sold for the actual M.R.P in the states that are far away from the production state (Tamilnadu).

Then , why can’t you mention the rates for different zones of India as shown below (considering the increasing transportation expenses based on the distance):

Maximum Retail price:

Tamilnadu (production state):  Rs.32.

Other southern states: Rs.34.

East and western states: Rs.36.

Northern states: Rs.38.

That’s all. Problem solved.

Instead of doing this, if they mention the same M.R.P and sell it for different rates in different shops, it leads to cheating and the people feel disappointed.

When a small shop in a busy area can sell a product with the M.R.P Rs.34 for just Rs.20, another shop in a remote area sells it for Rs.33.  Another shop may sell for Rs.30.

Why the same product is sold in different prices in different places?

Such inflammated pricing will create an unhealthy competition among the traders.

A big supermarket sells the same chilli powder like this:  Get 40% discount on M.R.P.  Just Rs.20 against the M.R.P of Rs.32.

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This unregulated trend should be stopped and the following system should be adopted:

The price can be mentioned on the product like this:

Price  :  Rs.30.

GST (18%)  : Rs.5.40

Total Price Rs. 35.40

Transportation:  (matching transport cost can be printed according to the zone where the product is supplied)

Tamilnadu (production state):  Rs.2.

Other southern states: Rs.3.

East and western states: Rs.4.

Northern states: Rs.5.

Or, instead of mentioning transport rates that may consume more space, they can print the price, tax, and the transport cost for that zone alone.

Whatever the zone may be the producer is going to pay the tax for the base rate of Rs.30 only.

If this system is brought into the practice it will ensure transparency in the product pricings and no shop can give excessive discounts of 40%, 60% 70% etc.

This will also stop the quoting of different prices based on the awareness level of the buyer by exploiting the innocence of the consumer.

If the seller is intelligent and the buyer is innocent that seller can sell a product for actual M.R.P that itself is 400% higher than the actual selling price.

Introducing G.S.T alone is not sufficient.  The government should clean the pricing system also.

Right pricing, Right taxes, Right transportation costs – all should be mentioned in the pack.

Will the Government consider this important suggestion and stop these pricing anomalies?

Also read: G.S.T – ONE INDIA – ONE TAX – A REVOLUTION IN INDIAN TAX SYSTEM!