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How will GST be applied to sin goods sold in your business?

Starting February 1, 2026, the Government of India requires businesses to calculate GST on the MRP (Maximum Retail Price) or RSP (Retail Sale Price) of sin goods, such as pan masala and tobacco products, instead of the selling price to comply with Rule 31D of GST. Learn more about the new GST rules.

To comply with this change, you must first enable the MRP field in your Zoho Books organisation. Here’s how:

  • Go to Settings.
  • Under Module Settings, select Items under General.
  • Navigate to the Field Customisation tab.
  • Hover over MRP, click the dropdown icon next to it, and select Mark as Active.

The MRP field will now be marked as Active.

If you’ve previously recorded the applicable sin goods in your organisation, you can update their MRPs manually, either in bulk or for each items individually.

To update the MRP for those items in bulk:

  • In the Home page, click View Details in the banner.
    • Or, go to Items on the left sidebar, and select Items.
    • Click Update MRP for Sin Goods in the top right corner.
  • In the pop-up that appears, click Enable & Continue.
  • In the Enter MRP for Sin Goods pop-up, you’ll see a list of applicable items. Enter their MRPs.
  • Enable Tax Calculation on MRP for all listed goods.
  • Click Continue.
  • In the Schedule MRP-Based Tax Update pop-up, choose the date to schedule the tax updates. The taxes will be updated on the scheduled date, and will be effective from February 1, 2026.
  • Click Schedule.

Zoho Books will apply the updated GST rules to these items from the scheduled date.

Going forward, when you create a new item, the MRP field will appear on the item creation page. When you enter the HSN code for the item that applies to pan masala or tobacco products, the Calculate tax based on MRP option will appear below the MRP field. In such cases, enable that option to calculate GST on the item’s MRP.

Note: If you create an item that falls under other sin goods (such as luxury items), this option won’t appear.

When you add these items to transactions:

  • You’ll see Taxed on MRP in the Tax column for the respective line item.
  • It will also appear below the item’s name in the transaction PDF.
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