The textile industry is one of the oldest and largest industries in India. It is also one of the most important sectors from the point of view of employment and exports. The sector employs nearly 45 million people, directly or indirectly. Textile products account for nearly 17% of India’s exports, making it one of its most important export sectors.
The Goods and Services Tax (GST) is a comprehensive indirect tax on India’s manufacture, sale, and consumption of goods and services. It subsumes a large number of central and state taxes, including excise duty, value-added tax (VAT), service tax, central sales tax (CST), octroi and entry tax. The GST is levied on the supply of goods and services at the national level.
Recently, there have been discussions about the GST rates in the textile sector and we will see what it is and how it has impacted the sector.
GST for Apparel, Clothing and Textile Products
Before 2022, the tax rate on textiles was 5%. As a result of this, the tax rate on raw materials was greater than the completed goods. This denied the people in the textile sector the opportunity to claim Input Tax Credit (ITC).
To remedy this, the government planned to increase the tax rates to 12% effective from January 2022 to solve the issue of inverted tax duty structures that affect the textile value chain.
However, this has been deferred by the government because of the objections received from various states and the industry itself. They have stated that the increase in compliance costs will particularly affect the unorganised sector and MSMEs, as well as raise the cost of poor man’s clothing.
So, no changes have been made to the GST rates of textiles yet, and it stands at the rates given in the table below.
Current GST Rates (as of May 2022)
Source: https://cbic-gst.gov.in/gst-goods-services-rates.html
|
Chapter / Heading / |
Description of Goods |
CGST Rate (%) |
SGST / UTGST Rate (%) |
IGST Rate (%) |
|
5004 to 5006 |
Silk yarn |
2.5% |
2.5% |
5% |
|
5106 to 5110 |
Yarn of wool or of animal hair |
2.5% |
2.5% |
5% |
|
52 |
Khadi yarn |
|||
|
5205 to 5207 |
Cotton yarn [other than khadi yarn |
2.5% |
2.5% |
5% |
|
5301 |
All goods i.e. flax, raw or processed but not spun; flax tow and waste (including yarn waste and garnetted stock) |
2.5% |
2.5% |
5% |
|
5302 |
True hemp (Cannabis sativa L), raw or processed but not spun; tow and waste of true hemp (including yarn waste and garnetted stock) |
2.5% |
2.5% |
5% |
|
5303 |
All goods i.e. textile bast fibres [other than jute fibres, raw or processed but not spun]; tow and waste of these fibres(including yarn waste and garnetted stock) |
2.5% |
2.5% |
5% |
|
5305 to 5308 |
All goods other than coconut coir fibre] including yarn of flax, jute, other textile bast fibres, other vegetable textile fibres; paper yarn, [including coir pith compost put up inunit container and bearing a brand name |
2.5% |
2.5% |
5% |
|
5309 to 5311 |
Woven fabrics of other vegetable textile fibres, paper yarn |
2.5% |
2.5% |
5% |
|
5609 00 20,5609 00 90 |
Toran, Doorway Decoration made from cotton yarn or woollen yarn and aabhala (mirror) with or without hanging flaps |
2.5% |
2.5% |
5% |
|
5402, 5403, 5404, 5405, 5406 |
Synthetic or artificial filament yarn |
6% |
6% |
12% |
|
5509, 5510, 5511 |
Yarn of man made staple fibres |
6% |
6% |
12% |
|
5604 |
Rubber thread and cord, textile covered; textile yarn, and strip and the like of heading 5404 or 5405, impregnated, coated, covered or sheathed with rubber or plastics |
6% |
6% |
12% |
|
5605 |
Metallised yarn, whether or not gimped, being textile yarn, or strip or the like of heading 5404 or 5405, combined with metal in the form of thread, strip or powder or covered with metal; |
6% |
6% |
12% |
|
5606 |
Gimped yarn, and strip and the like of heading 5404 or 5405, gimped (other than those of heading 5605 and gimped horsehair yarn); chenille yarn (including flock chenille yarn); loop wale-yarn |
6% |
6% |
12% |
|
5609 |
Articles of yarn, strip or the like of heading 5404 or 5405, twine, cordage, rope or cables, not elsewhere specified or included other than products of coir |
6% |
6% |
12% |
|
5809 |
Woven fabrics of metal thread and woven fabrics of metallised yarn of heading 5605, of a kind used in apparel, as furnishing fabrics or for similar purposes, not elsewhere specified or included; such as Zari borders [other than Embroidery or zari articles, that is to say,- imi, zari, kasab, saima, dabka, chumki, gota sitara, naqsi, kora, glass beads, badla, glzal |
6% |
6% |
12% |
|
5402, 5404, 5406 |
All goods other than synthetic filament yarns |
9% |
9% |
18% |
|
5403, 5405, 5406 |
All goods other than artificial filament yarns |
9% |
9% |
18% |
|
62 |
Articles of apparel and clothing accessories, not knitted or crocheted, of sale value not exceeding Rs. 1000 per piece |
2.5% |
2.5% |
5% |
|
6117, 6214 |
Handmade/hand embroidered shawls of sale value not exceeding Rs. 1000 per piece |
2.5 % |
2.5 % |
5% |
|
62 |
Articles of apparel and clothing accessories, not knitted or crocheted, of sale value exceeding Rs. 1000 per piece |
6% |
6% |
12% |
|
6117, 6214 |
Handmade/hand embroidered shawls of sale value exceeding Rs. 1000 per piece |
6% |
6% |
12% |
|
64 |
Footwear of sale value, not exceeding Rs.1000 per pair |
6% |
6% |
12% |
|
6401 |
Waterproof footwear with outer soles and uppers of rubber or of plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes |
9% |
9% |
18% |
|
6402 |
Other footwear with outer soles and uppers of rubber or plastics |
9% |
9% |
18% |
|
6403 |
Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather |
9% |
9% |
18% |
|
6404 |
Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials |
9% |
9% |
18% |
|
6405 |
Other footwear |
9% |
9% |
18% |
If you are looking to do GST registration or need help with GST return filings, contact eAuditors office and we will help you get it done without hassles.
