GST Applicability & Tax Rates on Textiles

GST Applicability & Tax Rates on Textiles

In terms of GDP, employment, and export promotion, India’s apparel sector is one of the oldest and largest contributors to the country’s economic development. The textile sector, one of the country’s oldest manufacturing industries and the second largest after agriculture, employs both skilled and unskilled workers. 

GST on Textile

The Goods and Service Tax (GST) on textiles has been raised from 5% to 12%. The goal of raising GST on textiles is to address the problem of inverted duty structures, which affect a small portion of the textile value chain.

Chapter 63 of the HSN code lists a variety of textile products under the headings “other made-up textile articles, sets, worn apparel and worn textile articles; rags,” including curtains, bedsheets, second-hand garments, and other textiles. 

The sale price of the goods will determine the rate of tax for this part. 

  1. A GST rate of 5% is imposed if the sale price of the textile product is below ₹ 1000. 

  1. A GST rate of 12% is imposed if the sale price exceeds ₹ 1000.

The textile items and products that are included in the HSN code’s chapter 63 list are as follows

  1. Interior blinds and curtains (including drapes) and bed valances.

  1. Kitchen and bathroom towels, as well as knitted or crocheted bed sheets, are typically made of terry toweling or other related terry textiles.

  1. Additional furnishings or decorative items include tablecloths, table covers, napkins, pillowcases, counterpanes, bed sheets, and more. Apart from terry towels, mosquito nets, and cushion covers

  1. Travel carpets and blankets.

  1. The same kind of bags and sacks are used for product packaging.

GST Rate on Apparel, and Clothing

Knitted clothes and apparel are covered by Chapter 61 of the HSN code. Chapter 62 of the HSN code covers non-knitted apparel and clothing. If the taxable value of the products does not exceed INR 1000 per piece, any piece of clothes or clothing would be taxed at 5% GST under both categories. All forms of clothes and clothing with a sale value greater than INR 1000 are subject to GST (Goods and Service Tax), according to Schedule II of Chapter 62.

GST Rate on Footwear Products

If the price of the Footwear is below INR 500, then the tax rate for a product will be 5%.

A GST Rate of 18 percent applies to all other types of Footwear, as follows

  1. Footwear that has outer soles of leather or composition leather, plastic, uppers of leather, and rubber.
  1. Waterproof footwear with plastic or rubber outer soles and uppers that are not attached to the sole or assembled by riveting, sewing, screwing, plugging, nailing, or other similar methods.
  1. Footwear has rubber, plastic, leather, or composite leather outer soles and textile uppers.
  1. Other footwear with outer soles and uppers of plastics or rubber.

 



Created & Posted by Pooja

Income Tax Expert at TAXAJ

 

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