GST on Clothes

GST levied on clothes depends on the cost of your purchased clothes. GST of 5% will be levied on readymade garments whose price doesn’t exceed ₹1000 and GST of 12% will be applicable on readymade garments whose price exceeds ₹1000.

Like any other category of goods and services produced and subsequently consumed in India, clothes attract a specific percentage as GST. Additionally, the same varies as it depends upon the sub-category of clothing that the garment in question falls in as per the relevant documents released by the GST council. This article will essentially take you through the rates of GST on clothes as is announced by the officials representing the GST council.

The percentage rates that a particular customer is liable to honour as GST on clothes depend on a handful of factors. Those factors are the likes of the price point at which they are offered the same, the material it is made of, and whether or not the garment in question is hand-sewn or produced with the help of mechanical equipment, among others. Such diversification is attributable to the fact that the Indian industry is too extensive and diverse for it to be categorised under one single chapter. You will find below a table that contains the applicable GST rate on clothes based on the method of their production, the price tag that they are sold with, and the kind of material used in them.

Please find below a list of the materials in question and the percentage charged as GST on clothes or other products made with their help.

The Indian apparel industry is the second-biggest industry that is operating on the grounds of India after agriculture. In addition to the same, on average, it has historically brought in anywhere between 10-14 percent of the total revenue earned from the export of Indian goods. Before the introduction of GST, the apparel sector was widely unorganised, which did not allow the government to earn a potentially substantial amount as tax revenues from the sector in question. With the introduction of the GST on clothes and similar fabric-based products, the government plans on changing that narrative and simultaneously facilitate the growth of the Garments industry.

The aforementioned tax rates announced by the GST council have been met with mixed responses, very much like in the case of the tax rates announced for other product categories. The people connected to the Indian apparel industry expressed their delight and gratefulness over the fact that the taxation process has now been relatively simplified. In addition to the same, they were also happy that the articles that have a price tag of below ₹1000 are majorly left unaffected as the total of the indirect taxes applied previously tended to go beyond the 5% mark before the implementation of the GST. However, they did express concerns over the rates of GST on clothes being revised to 12%, and in some cases, 18%.

It must be noted that the rates of GST on clothes and other products made out of fabrics are always subject to revision and even complete removal, depending upon the circumstances in which the industry and/or the Indian economy is at large. Additionally, one must note that the articles which are either exempt or attract 0% as GST can be assigned a definitive GST rate at any given point in time. One can learn more about the impact of GST on the apparel sector on Bajaj Markets.