Know GST Rates on Textile and Garments

Know GST Rates on Textile and Garments

Textile Industry is the second largest industry after agricultural sector in India. Under GST, the apparel and clothing segment is divided across various chapters. This industry is so diverse and vast, that is difficult to contain all the segments of the clothing and apparel industry under one chapter. Further, the rate of GST charged on these items also differs from type to type.

Through this blog, we have tried to answered the questions related to GST on Textiles.

What are the GST Rates on Textiles or Garments or Clothes?

The GST Rates on Textiles or Garments or Clothes are as follows:

Particulars

CGST

SGST

IGST

Man made fabrics (for retail sale)

6%

6%

12%

Synthetic Yarn

6%

6%

12%

Cotton

2.5%

2.5%

5%

Cotton Yarn (other than Khadi Yarn)

2.5%

2.5%

5%

Most types of fabric

6%

6%

12%

Khadi Yarn

0

0

0

Silk Yarn

2.5%

2.5%

5%

Raw Silk and Waste

0

0

0

Jute

2.5%

2.5%

5%

Also Read: Qualifications for GST Registration

What are the GST Rates on Readymade Garments below Rs. 1000 and above Rs. 1000?

Particulars

CGST

SGST

IGST

Readymade Garments (<Rs. 1000/piece)

2.5%

2.5%

5%

Readymade Garments (>Rs. 1000/piece)

6%

6%

12%

Case 1: Shaurya Ltd. sells trousers for Rs. 1500 to the customer. The GST to be charged by Shaurya Ltd. shall be at the rate of 12%.

Case 2: Shaurya Ltd. sells trousers, same as mentioned above for Rs. 700 to the customer. Then, the GST shall be charged on the same is 5%.

Note:
The GST Council through 46th GST Council Meeting has decided to defer the GST hike rate from 5% to 12% on readymade garments below ₹1000/piece

Does the buyer of raw cotton (who is a registered person) from the farmer need to pay GST on Reverse Charge basis?

Yes. As the cotton under heading 5201 and 5203 has been placed under 5% rate and the cotton farmer is not liable to registration, the buyers of raw cotton (who are registered persons) from the farmers are required to pay tax on Reverse Charge basis as per Section 9 (4) of the CGST Act, 2017.

Also Read: Key Changes In GST That Are Effective From January, 2021

Is GST included in MRP of Clothes?

MRP (Maximum Retail Price) is the maximum price that can be charged from Buyers. MRP is inclusive of all taxes including GST. GST cannot be charged over and above MRP.

In respect of goods classified as Apparels/Garments, the rate of tax for goods of sale value not exceeding Rs.1000/- is 5 percent and for those exceeding Rs.1000/- is 12%. Is this value transaction value or MRP?

As per the GST Rate schedule, all goods of sale value not exceeding value of Rs.1000/- per piece would be taxed at 5% and the goods of sale value exceeding Rs.1000/- per piece would be taxed at 12%. Therefore, it is the sale value i.e. the transaction value on which the tax has to be paid and not the MRP (Maximum Retail Price).

What is the GST rate for clothing in India if you are exporting clothing and apparel?

No, as per the provisions of the GST, export of any goods or services in non-taxable under the Act.

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