The Goods and Services Tax (GST) has brought significant changes to the way textiles, garments, and clothes are taxed in India. As one of the largest industries in the country, the textile sector has been deeply impacted by the introduction of GST, which has brought clarity and uniformity to tax rates on different categories of clothing. The GST on clothes, textiles, and garments is not only aimed at ensuring a seamless tax structure but also at addressing the unique needs of manufacturers, retailers, and consumers.
In this blog, we will explore the GST rates on clothes, textiles, and garments, provide a detailed guide on how to calculate GST, and discuss the GST registration process for fabric businesses, along with expert tips to ensure compliance and maximize benefits in the textile industry.
What is the GST on Clothes, Textiles and Garments?
Clothing items priced below ₹1000 attract a GST rate of 5%, whereas those priced ₹1000 or above are taxed at 12%. Ready-made garments fall under the 12% GST slab. Meanwhile, synthetic or man-made fibers and fabrics are subject to a higher GST rate of 18%.
Although the standard GST rate for textile products is 12%, items such as apparel and footwear priced under ₹1000 are taxed at a concessional 5% rate, making them more affordable for consumers.
What is the GST Rates on Clothes?
Below is the table listing various textile and footwear categories along with their GST rates and descriptions:
| Category | Details | GST Rate |
| Silk and Jute Products | Natural silk and jute fibres are exempt from GST. | Exempt |
| Fabrics | Applies to all types of fabrics, whether natural or synthetic. | 5% |
| Apparel (up to Rs. 1,000) | For garments priced at or below Rs. 1,000 per piece. | 5% |
| Footwear (up to Rs. 1,000) | For footwear priced at or below Rs. 1,000 per pair. | 5% |
| Textile Job Work | Includes services like embroidery, weaving, and knitting. | 5% |
| Garment Accessories | Includes belts, ties, scarves, and other clothing accessories. | 12% |
| Apparel (above Rs. 1,000) | For garments priced above Rs. 1,000 per piece. | 12% |
| Footwear (above Rs. 1,000) | For footwear priced above Rs. 1,000 per pair. | 18% |
What is the GST on Textiles?
Below is the table listing various textile products along with their HSN codes and applicable GST rates:
| Items | HSN Code | GST Rate |
| Silk Yarn | 5004 to 5006 | 5% |
| Woven Fabrics of Silk or Silk Waste | 5007 | 5% |
| Garneted Stock of Wool, Fine or Coarse Animal Hair, Shoddy Wool | 5104 | 5% |
| Wool and Fine or Coarse Animal Hair, Carded or Combed | 5105 | 5% |
| Yarn of Wool or Animal Hair | 5106 to 5110 | 5% |
| Woven Fabrics of Wool or Animal Hair | 5111 to 5113 | 5% |
| Cotton and Cotton Waste | 5201 to 5203 | 5% |
| Cotton Sewing Thread (Whether or Not Put Up for Retail Sale) | 5204 | 5% |
| Cotton Yarn (Other Than Khadi Yarn) | 5205 to 5207 | 5% |
| Woven Fabrics of Cotton | 5208 to 5212 | 5% |
| Flax, Raw or Processed but Not Spun; Flax Tow and Waste (Including Yarn Waste and Garneted Stock) | 5301 | 5% |
| Textile Bast Fibres (Other Than Jute Fibres), Tow and Waste of These Fibres (Including Yarn Waste and Garneted Stock) | 5303 | 5% |
| All Goods, Including Yarn of Flax, Jute, Other Textile Bast Fibres, Other Vegetable Textile Fibres, and Paper Yarn (Other Than Coconut Coir Fibre) | 5305 to 5308 | 5% |
| Woven Fabrics of Vegetable Textile Fibres, Paper Yarn | 5309 to 5311 | 5% |
| Woven Fabrics of Manmade Textile Materials | 5407, 5408 | 5% |
| Woven Fabrics of Manmade Staple Fibres | 5512 to 5516 | 5% |
| Real Zari Thread (Gold) and Silver Thread | 5605, 5600, 5610 | 5% |
| Jute Twine, Coir Cordage or Ropes | 5607 | 5% |
| Knotted Netting of Twine, Cordage or Rope | 5608 | 5% |
| Products of Coir | 5609 | 5% |
| Coir Mats, Matting, Floor Covering, and Handloom Durries | 5702, 5703, 5705 | 5% |
| Narrow Fabrics Consisting of Warp Without Weft Assembled by Means of an Adhesive (Bolducs) | 5806 | 5% |
| All Goods of Knitted or Crocheted Fabrics | 60 | 5% |
How to Calculate GST on Clothes?
You can calculate GST on clothes using this formula:
To calculate the total cost of clothes, including GST, follow these steps:
- Step 1: Determine the Price of Clothes : Start with the base price of the clothes. For example, a garment costs ₹800.
- Step 2: Identify the Applicable GST Rate: The
GST rate depends on the price:
- 5% GST if the price is below ₹1,000.
- 12% GST if the price exceeds ₹1,000.
- For this example, the price is ₹800, so the GST rate is 5%.
- Step 3: Calculate GST: Use the formula: GST Amount = (Price × GST Rate) ÷ 100
For ₹800: ₹800 × 5 ÷ 100 = ₹40
- Step 4: Add GST to the Base Price: Total Price = Base Price + GST Amount ₹800 + ₹40 = ₹840
By following these steps, you can calculate GST on clothes accurately and determine the final price.
Also Read: GST Rates 2025: Complete List for Goods and Services
Did you know?
India's textile sector contributes 2.3% to GDP and employs over 45 million people, making it the second-largest employment generator after agriculture. GST has helped create a uniform tax structure, benefiting small-scale and large-scale manufacturers alike.
Amendments Impacting the Clothes and Textile Sector
The table below highlights the key amendments in the clothes and textile sector before and after GST implementation:
| Aspect | Before GST | After GST |
| Tax Structure | Fragmented system with VAT, excise duty, and CST. | Unified GST system with 5% or 12% rates based on value. |
| Tax Rates | Varied across states, ranging from 4% to 8%. | 5% for fabrics below ₹1,000; 12% for fabrics above ₹1,000. |
| Input Tax Credit | Limited availability of tax credits, increasing costs. | Seamless input tax credit system, reducing cascading taxes. |
| Compliance | Complex and state-dependent tax filing. | Simplified and uniform tax compliance nationwide. |
| Impact on Small Units | Relatively low costs but inconsistent across regions. | Higher costs due to GST on raw materials like yarn. |
| Industry Benefits | Limited transparency and formalisation. | Improved transparency, formalisation, and competitiveness. |
Expert Tips for Compliance and Advantage
The list below provides expert tips to ensure compliance and maximize advantages under GST in the textile industry:
- GST registration is mandatory to comply with legal requirements and claim Input Tax Credits (ITC).
- Make sure all purchases, sales, and tax payments are recorded accurately.
- Make sure you understand the applicable GST Rate which is 5% GST for fabrics below ₹1,000 and 12% GST for those above ₹1,000 to avoid incorrect filings.
- Reduce your overall tax liability by claiming input tax credits on raw materials like yarn and dyes.
- Businesses over turnover thresholds should use e-invoicing for seamless reporting.
- To avoid penalties and interest, file GST returns on time.
- Keep up-to-date with GST rate changes and amendments that affect the textile industry to ensure continued compliance.
With Vakilsearch, you get expert guidance to stay updated on GST amendments, avoid penalties, and focus on growing your business. Let us manage your compliance while you focus on your goals. Reach out today!
Checkout the HSN Code for Clothes
Conclusion
In conclusion, understanding the GST on clothes, textiles, and garments is crucial for businesses and consumers alike. The implementation of a uniform tax structure has streamlined the taxation process, making it easier to navigate GST rates on fabrics, ready-made garments, and raw materials.
Whether it's the 5% GST on fabrics priced below ₹1,000 or the 12% rate on garments above ₹1,000, having a clear grasp of these rates helps ensure accurate compliance and calculation of GST. For fabric businesses, registering for GST and following the correct processes allows for smooth operations and the ability to claim Input Tax Credits (ITC), reducing the overall tax burden.
By adhering to these practices, businesses can not only avoid penalties but also contribute to the growth and formalization of the textile sector, which plays a vital role in India's economy.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
