✓Minimal Documentation ✓Flexible Repayment ✓Collateral Free Loan | Apply for Business Loan Now!

GST on Clothes

Like any other category of goods and services produced and subsequently consumed in India, clothes attract a specific percentage as GST. Additionally, the same varies as it depends upon the sub-category of clothing that the garment in question falls in as per the relevant documents released by the GST council. This article will essentially take you through the rates of GST on clothes as is announced by the officials representing the GST council.

GST Rate for Clothing in India

The percentage rates that a particular customer is liable to honour as GST on clothes depend on a handful of factors. Those factors are the likes of the price point at which they are offered the same, the material it is made of, and whether or not the garment in question is hand-sewn or produced with the help of mechanical equipment, among others. Such diversification is attributable to the fact that the Indian industry is too extensive and diverse for it to be categorised under one single chapter. You will find below a table that contains the applicable GST rate on clothes based on the method of their production, the price tag that they are sold with, and the kind of material used in them.

GST Rates for Clothing and Apparel

Item

Harmonized System of Nomenclature (HSN) Code

Applicable % of GST on clothes and/or articles in question

Condition or conditions under which the same are applicable

Clothing apparel that have been knitted

61

5

If the value which is taxable is under ₹ 1000

Apparel and clothing that have not been knitted or have been mechanically manufactured

62

5

If the value which is taxable is under ₹1000

Clothing and Apparel irrespective of how it has been made

61 & 62

12

If the value which is taxable is equal to or over ₹1000

Other textile-based products( For example: bedsheets and curtains)

63

5

If the value which is taxable is equal to or over ₹1000

63

12

If the value which is taxable is equal to or over ₹1000

GST Rate for Clothing based on the Fibre of Goods

Please find below a list of the materials in question and the percentage charged as GST on clothes or other products made with their help.

Material Name

The assigned HSN code

Applicable GST Rate (Expressed in % terms)

On what kind of products are such GST rates applicable?

Cotton

52

5

Include all cotton goods

Silk

50

5

All silk-based products

Silkworm laying, silk that is raw, wasted silk

50

5

All sorts of Silk-based products are charged the applicable GST%

Wool or products based on it

5104

5

Stock of wool, fine/coarse animal hair, wool that is shoddy

5105

5

Wool, fine/coarse animal hair that is either carded or has been combed

5106/5107/5108/5109/5110

5

Yarn of wool and/or animal hair

5111/5112/5113

5

The fabrics which are made of wool or animal hair

5101

Exempt

Wool that is either not carded or combed

5102

Exempt

Fine or coarse animal hair which has not been carded or combed

5103

Exempt

Wool waste/fine coarse animal hair

Products made from Nylon and other similar Artificial fibres

54

5

Applicable to man-made materials only

54

18

Synthetic filament yarn like acrylic, nylon, polyester, etc.

54

18

Products such as yarn and viscose, among others.

54

18

Sewing thread of man-made filaments

Importance of the Apparel Industry to India

The Indian apparel industry is the second-biggest industry that is operating on the grounds of India after agriculture. In addition to the same, on average, it has historically brought in anywhere between 10-14 percent of the total revenue earned from the export of Indian goods. Before the introduction of GST, the apparel sector was widely unorganised, which did not allow the government to earn a potentially substantial amount as tax revenues from the sector in question. With the introduction of the GST on clothes and similar fabric-based products, the government plans on changing that narrative and simultaneously facilitate the growth of the Garments industry.

Apparel Industry’s Response to the Announcement of GST Rate for Clothing

The aforementioned tax rates announced by the GST council have been met with mixed responses, very much like in the case of the tax rates announced for other product categories. The people connected to the Indian apparel industry expressed their delight and gratefulness over the fact that the taxation process has now been relatively simplified. In addition to the same, they were also happy that the articles that have a price tag of below ₹1000 are majorly left unaffected as the total of the indirect taxes applied previously tended to go beyond the 5% mark before the implementation of the GST. However, they did express concerns over the rates of GST on clothes being revised to 12%, and in some cases, 18%.

It must be noted that the rates of GST on clothes and other products made out of fabrics are always subject to revision and even complete removal, depending upon the circumstances in which the industry and/or the Indian economy is at large. Additionally, one must note that the articles which are either exempt or attract 0% as GST can be assigned a definitive GST rate at any given point in time. One can learn more about the impact of GST on the apparel sector on Finserv MARKETS.