Explore GST rates on clothes, textiles & garments in India. Understand ITC, calculation methods and the registration process for textile businesses.
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.
Under the current GST regime, clothes and garments are categorized into various tax slabs, with different rates applicable to ready-made garments, fabrics, and even raw materials used in textile manufacturing. Understanding the GST rates on fabrics, ready-made garments, and textiles is essential for businesses in the garment industry, as it directly affects their pricing and compliance processes.
Moreover, certain exemptions and benefits, such as Input Tax Credit (ITC), play a crucial role in reducing the overall tax burden for manufacturers and dealers of textiles. 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.
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
Here are the GST rates on different types of clothing and fabrics based on their price range:
| HSN Code | Description | GST Rate | Conditions |
| 5007 | Woven fabrics of silk | 5% | Applies to fabrics priced below ₹1,000 per piece |
| 5513 | Woven fabrics of polyester | 5% | Below ₹1,000 per piece |
| 6101 | Men’s or boys’ garments | 12% | Applies if the price exceeds ₹1,000 per piece |
| 6204 | Women’s or girls’ garments | 12% | For garments priced above ₹1,000 per piece |
| 5208 | Woven fabrics of cotton | 5% | Below ₹1,000 per piece |
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 on Textiles
Below is the GST rate chart for various textile products based on HSN codes and pricing conditions:
| HSN Code | Description | GST Rate | Conditions |
| 5201 | Raw cotton | 5% | Applies to unprocessed cotton |
| 5208 | Woven fabrics of cotton | 5% | For fabrics priced below ₹1,000 per piece |
| 5407 | Woven fabrics of synthetic yarn | 12% | For fabrics priced above ₹1,000 per piece |
| 5512 | Woven fabrics of polyester | 12% | Applies if the price exceeds ₹1,000 per piece |
| 6006 | Knitted or crocheted fabrics | 5% | Below ₹1,000 per piece |
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.
GST Registration Process for Fabric Businesses
To register for GST, follow these steps:
- Visit the GST Portal: Go to www.gst.gov.in and click “Register Now”.
- Fill in Part A of the form: To verify, enter your PAN, mobile number, and email address.
- 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.
- Receive ARN: Once submitted, an Application Reference Number (ARN) is generated for tracking.
- 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 GST registration documents:
- Business or proprietor’s PAN card.
- Ownership, partnership, and director Aadhaar.
- Certificates of incorporation, partnership deeds, or any other proof of business registration.
- Rent agreement, electric bill, or property tax receipt.
- Canceled cheque or bank statement.
- A passport-sized photo of the proprietor, partner, or director.
- For company or LLP registrations, use a Class 2 or Class 3 digital signature.
- If applicable, authorization letter.
Scan all documents clearly for successful GST submission.
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.
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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.
FAQs About GST on Clothes, Garments & Textile
Ready-made garments are taxed at a 12% GST rate, while synthetic and man-made fibres or fabrics attract an 18% GST. The standard GST rate for textiles is 12%, but apparel and footwear under Rs. 1000 are taxed at 5%.
Yes, children's wear is generally exempt from GST in India, providing relief to parents and caregivers.
Yes, textile manufacturers can claim ITC on the taxes paid for inputs used in the manufacturing process, reducing their overall tax liability.
Garments are classified into various categories such as casual wear, formal wear, and ethnic wear, each with applicable GST rates.
Yes, raw materials for textiles, including fabrics, are subject to GST, but manufacturers may claim ITC for these inputs.
GST increases the price of clothes, textiles, and garments for consumers, as the tax is added to the final retail price.
Yes, garment manufacturers must file GST returns regularly and comply with tax regulations for both domestic sales and exports.
Textile dealers must file GST returns, reporting sales and purchases, and ensure timely payment of GST on transactions.
Yes, certain textile products like handloom goods may be exempt from GST, benefiting small-scale producers and artisans. What is the GST rate on textiles and ready-made garments
Are there any GST exemptions on children's clothing?
Can textile manufacturers claim Input Tax Credit (ITC)?
What categories of garments are taxed under GST?
Is GST applicable to raw materials for textile production?
How does GST impact the price of clothes for consumers?
Do garment manufacturers need to comply with GST filing?
What is the GST filing process for textile dealers?
Are there any exemptions on textile products under GST?
