GST on Clothes: Rates, HSN Codes & Textile Insights

Explore GST on clothes: Find rates, HSN codes & registration help. Stay informed with tailored legal insights for textiles with Vakilsearch's guide.

GST on cloth affects a considerable portion of the Indian textile industry, including manufacturers as well as consumers. It is possible to impose a tax rate of up to 12% for fabrics depending on their type and value. These rates were introduced to simplify a previously complex tax regime involving VAT, excise duty, and CST.

It is estimated that the Indian textile industry will generate $223 billion in exports and employment by the year 2025. To comply with tax regulations, businesses and consumers need to be aware of how taxes affect prices. This article discusses the effects of GST on fabrics in the textile industry.

GST on Clothes, Textiles and Garments

GST on clothes, textiles, and garments varies based on their value. Fabrics and garments priced below ₹1,000 attract a 5% GST, while those priced above ₹1,000 are taxed at 12% GST. Unstitched fabrics, yarn, and certain raw materials used in textiles also fall under the 5% GST category, streamlining taxation across the sector.

GST Rates on Clothes 

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

GST Rates on Textile

GST Registration Process for Fabric Businesses

To register for GST, follow these steps:

1. Visit the GST Portal: Go to www.gst.gov.in and click “Register Now”.
2. Fill in Part A of the form: To verify, enter your PAN, mobile number, and email address.
3. Fill in Part B of the application: Provide business details, including name, address, type of business (fabric manufacturing, trading, etc.). Upload documents, including PAN card, proof of address, bank details, and proof of identity.
4. Receive ARN: Once submitted, an Application Reference Number (ARN) is generated for tracking.
5. Approval: After verification, you’ll receive your GSTIN and login credentials.

By registering for GST, fabric businesses are able to comply with tax regulations and claim input tax credits.

Documents Required for GST Registration

Here is a checklist of documents needed for GST registration:

1. Business or proprietor’s PAN card.
2. Ownership, partnership, and director Aadhaar.
3. Certificates of incorporation, partnership deeds, or any other proof of business registration.
4. Rent agreement, electric bill, or property tax receipt.
5. Canceled cheque or bank statement.
6. A passport-sized photo of the proprietor, partner, or director.
7. For company or LLP registrations, use a Class 2 or Class 3 digital signature.
8. If applicable, authorization letter.

Scan all documents clearly for successful GST submission.

Amendments Impacting the Clothes and Textile Sector

Expert Tips for Compliance and Advantage

1. GST registration is mandatory to comply with legal requirements and claim Input Tax Credits (ITC).
2. Make sure all purchases, sales, and tax payments are recorded accurately.
3. 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.
4. Reduce your overall tax liability by claiming input tax credits on raw materials like yarn and dyes.
5. Businesses over turnover thresholds should use e-invoicing for seamless reporting.
6. To avoid penalties and interest, file GST returns on time.
7. 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!

FAQs About GST on Clothes, Garments & Textile