The GST Council modified the GST on textiles, textile products, apparel, and clothes following the implementation of the GST. The Council decided on the GST rates in India, which are 0%, 5%, 12%, 18%, and 28% for both goods and services. At the GST Council meeting on June 3, 2017, the GST rate on textiles, including clothing, cotton products, and other textiles, was announced. The GST Council established the GST on textile, garment, and accessory products following the implementation of the GST. This blog thoroughly studies the GST rate for textile, apparel, and garment products.
GST rate for garments, accessories, and clothing
The HSN code’s Chapter 61 covers apparel and knitwear. Clothing and accessories that are not crocheted are covered by Chapter 62 of the HSN code. If the taxable value of the goods does not exceed Rs. 1000 per item, any clothing or jewellery item that falls under either category will be subject to a 5% GST tax. Schedule II of Chapter 62 states that 12% GST will be charged on all clothing and accessories with a retail value of more than Rs. 1000.
GST on clothing and accessory items
Under the titles ‘other made-up textile articles, sets, worn clothing, and worn textile articles; rags’, Chapter 63 of the HSN code offers a range of textile products, including curtains, bed sheets, used clothing, and other textiles. The GST rate for this chapter will be based on the item’s retail price. If the sale price of the textile product is less than Rs. 1000, a GST rate of 5% is applied. If the sale price exceeds Rs. 1000, 12% GST is applied. The Chapter 63 list of the HSN code includes the following textile products:
- Blankets and travelling rugs
- Other furnishing articles such as bedspreads, counterpanes, napkins, pillowcases and pillow slips, tablecloths and table covers, towels other than terry towels, mosquito nets, and cushion covers
- Tarpaulins, awnings, and sunblinds; tents; sails for boats, sailboards, or landcraft; camping goods
- Other made-up items, such as dress patterns, floor mats, dishcloths, dusters, and similar cleaning cloths, life vests, and life belts, sets of woven fabric and yarn, whether or not they include accessories, for use in creating rugs, tapestries, embroidered tablecloths or serviettes, or similar textile items, packaged for retail sale
The GST Council has announced the GST rate for all commodities based on HSN codes. An international method for categorising items in international trade is known as the HSN code. Based on the HSN classification, the GST rate for cotton, yarn, silk, wool, and nylon may range from 0% to 5% to 12% to 18% to 28%. These products belong to different chapters of the HSN code.
GST rate for cotton
The HSN code classifies cotton under Chapter 52. Thus, items manufactured of cotton, such as Gandhi topi and khadi yarn, are free from the GST. A GST of 5% is applied to all other cotton and cotton-related products.
- Cotton
- Cotton waste
- Cotton-based thread used for sewing
- Cotton yarn, other than khadi yarn
- Cotton fabrics [with no refund of ITC accumulation]
GST rate for silk
The HSN code system assigns chapter 50 to Silk. The GST is not applied to raw silk, cocoons, silkworm eggs, or silk waste. The following items made of silk would be subject to a 5% tax:
- Silk yarn
- Woven fabrics of silk or silk waste [with no refund of ITC accumulation]
GST rate for wool
The HSN code classifies wool, fine or coarse animal hair, horsehair yarn, and woven cloth under Chapter 51. Waste wool or fine or coarse animal hair and coarse or fine animal hair that has not been carded or combed are exempt from GST.
The following items are subject to a 5% GST tax:
- Garnetted stock of wool or fine or coarse animal hair, shoddy wool
- Wool and fine or coarse animal hair, carded or combed
- Yarn of wool or animal hair
- Fabrics of wool or animal hair [with no refund of ITC accumulation]
GST rate for nylon and artificial fibres
Nylon and other artificial fibres are classified under Chapter 54 of the HSN code together with synthetic filaments and synthetic textile materials of a similar nature. All items are taxed at 5% or 18% under this chapter. Man-made textile fabrics are subject to a 5% GST tax [without the ITC accumulation rebate].
All other products are subject to an 18% GST tax.
- Synthetic filament yarn such as nylon, polyester, acrylic, etc.
- Artificial filament yarn such as viscose rayon, Cuprammonium, etc.
GST rates for clothing and apparel
| Items | Harmonized system of nomenclature (HSN) codes | GST applicable on the questioned items of clothing or other items | Condition or conditions under which the same are applicable |
|---|---|---|---|
| Knitted clothing and accessories | 61 | 5 | If the value which is taxable is under ₹ 1000 |
| Garments and accessories that are not knit or that were produced mechanically | 62 | 5 | If the taxable value is under ₹1000 |
| Clothing and apparel, irrespective of how they have been made | 61 & 62 | 12 | If the taxable value is equal to or over ₹1000 |
| Other textile-based products (for example, bed sheets and curtains) | 63 | 5 | If the taxable value 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
Here is a list of the materials in question and the percentage of GST applied to clothing and other items created with them.
| Material Names | The assigned HSN codes | 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 | The 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
After agriculture, the Indian garment market ranks as the second-largest sector of the country’s economy. Additionally, historically, it has contributed anywhere from 10% to 14% of the overall income from the export of Indian goods. The garment industry was largely unorganised prior to the implementation of GST, which prevented the government from collecting a potentially sizable amount of tax revenue from the industry. The government hopes to change this narrative by imposing a GST on clothing and other items made of fabric while also promoting the expansion of the apparel sector.
Conclusion
Similar to how the tax rates published for other product categories were received, the GST Council’s aforementioned tax rates have generated a range of reactions. The individuals associated with the Indian garment business expressed their gratitude and joy that the taxation process has been significantly simplified. In addition, they welcomed the fact that products with a price tag under 1000 rupees are largely untouched by the GST because, before its implementation, the total of all applied indirect taxes frequently exceeded the 5% threshold. They did, however, voice reservations about the proposed GST rates for clothing, which were increased to 12% in some circumstances and 18% in others.
It should be noted that the GST rates on clothing and other textile-based products are constantly subject to change and, in certain cases, may even be entirely eliminated, depending on the state of the industry and/or the Indian economy as a whole. One must also be aware that the items that are either exempt from GST or attract 0% of it can at any time be allocated a specific GST rate.
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