Most etailers stop charging GST over discounted MRP post LocalCircles’ survey and escalation

20th December 2019, New Delhi: Consumers over the last 2 years have been regularly reporting on LocalCircles that many eCommerce sites as well as retailers have been charging GST on discounted MRP. This is where a product is advertised at 50% discount and MRP INR 2000 and is sold at INR 1000 plus GST thereby selling it INR 1180 and hence providing a discount of 41% and not 50%. This according to multiple rulings of the district forum and state commission is classified as an unfair trade practice.

In November 2018, LocalCircles had requested the Department of Consumer Affairs (Legal Metrology Division) to ensure that this practice by eCommerce sites and retail stores is put to an end and the discount advertised is what is genuinely given to consumers. Following that, LocalCircles also escalated the issue with ecommerce sites and retailers.

A few months back, LocalCircles had conducted a survey to gauge the current magnitude of the issue, and a total of 8,320 votes were polled on it. The poll asked citizens how many instances they had experienced in the last 3 months where GST was being charged on top of the discounted price. 39% citizens also said that they have been charged GST on discounted price once or more while shopping online or in retail stores in the last 3 months. 29% said it had not happened to them while 32% were not sure. Many consumers had earlier reported that sellers were misleading them by charging GST on top of a discounted price and this was against the MRP rule.

39% consumers say they have recently been charged GST above discounted MRP

Consumers had earlier reported on LocalCircles that some brands like Zara, Vero Moda, Pantaloon, Shoppers Stop, Lifestyle, Home Saaz, Jabong, Myntra, First Cry etc. are the ones regularly engaging in this unfair trade practice of charging GST over a discounted MRP.

Under the Consumer Laws, the MRP is inclusive of GST. So, whenever a discount is offered, it is on MRP. Hence it is an unfair trade practice to charge GST on top of a discounted price.

The latest study by LocalCircles reveals that most ecommerce sites are now complying with the MRP rule and not charging GST on top of the discounted price. E-tailers like Amazon, Flipkart, Snapdeal, Myntra etc. show prices that are all inclusive after the discount. However, there are still smaller the ecommerce platforms who are not complying with the rules. These include platforms like Jabong, Firstcry etc. These platforms continue to advertise discounts of a certain percentage to the MRP and when billing is done, GST is levied on top of the discounted price.

Some pictures of the bills uploaded by the consumers are also attached with this document.

Etailers NOT compliant as of December 2019

Firstcry

Jabong

Etailers compliant as of December 2019

Myntra

Amazon

Flipkart

Snapdeal

Brandfactory

Lenskart