By Amit Chopra
GST on footwear is a high-stakes game of hopscotch. Up to ₹2,500 per pair? You pay 5%. Just one rupee over? Boom – 18%.
A shoe with an MRP of ₹3,000 clearly lands in the higher slab. But knock it down to ₹2,400 with a discount and suddenly GST drops to 5%. The tax isn’t about the tag it’s about the actual sale value at the counter.
When the two-slab system came into play, retailers quickly found a loophole to exploit. They’d tag shoes at ₹999, tack on GST and bill the customer ₹1,049 still technically in the lower slab. A tiny tweak, yes, but enough to stretch margins without ever stepping into the higher GST bracket.
Fast forward to today and the game has the same cliff-edge feel at ₹2,500. The tax slab still hinges on that precise number: go above it, even by a single rupee and the GST jumps. For brands and traders, the stakes are high and every rupee matters in this tightrope of pricing.
Here is a breakdown of the key differences and what they mean for consumers and businesses:
| Feature | Sale Value (Transaction Value) | Maximum Retail Price (MRP) |
|---|---|---|
| Calculation Base | GST is calculated as a percentage of the actual selling price, which is the amount the buyer pays after any discounts. | The MRP is set by the manufacturer and is the highest price a product can legally be sold for. GST is already included within this price. |
| Applicability | If a retailer sells an item for less than the MRP, the GST is calculated on that lower, discounted sale price. | The MRP acts as a legal ceiling. A retailer cannot charge a customer any amount, including separate GST, that exceeds the printed MRP. |
| Invoice Details | A proper GST invoice will show the breakdown, indicating the pre-tax sale value, the GST amount, and the final total paid. | When a product is sold at MRP, the invoice will often show the price and tax split, but the total paid will not exceed the MRP. |
| Example | A product has an MRP of ₹100 with an 18% GST rate. A store sells it at a discounted price of ₹80. The GST is calculated on the ₹80 selling price, not the ₹100 MRP. | A product with an MRP of ₹100 (inclusive of 18% GST) is sold at full price. The buyer pays ₹100, and the bill shows the tax amount included within that total. |
Amit Chopra, Founder, Shoes & Accessories, is a leading voice in promoting Indian brands and companies globally. Amit’s expertise spans sourcing, trade strategy and retail branding. He has led multiple trade delegations overseas and represents Expo Riva Schuh & Gardabags in India.
