New GST on Fabric: Yarn to Finished Textile Overview
Quick Summary
- The new GST rate for all fabric types, including cotton, silk, wool, synthetic, and denim, is 5% in India.
- Previously, fabrics were also taxed at a uniform 5% GST rate to keep them affordable and within the GST system.
- Cotton fabric, whether pure or blended with minor synthetics, remains at a 5% GST rate to support domestic handloom sectors.
- Businesses with over ₹40 lakhs turnover must register for GST, charge 5% on sales, and can claim Input Tax Credit on higher-taxed inputs.
From cotton sarees to polyester blends, fabric plays a vital role in India’s textile and fashion industries. Whether you’re a manufacturer, retailer, or consumer, knowing the fabric HSN code and GST rate works is important for pricing, tax compliance, and business decisions.
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New GST Rate on Fabric in India
Fabrics are generally taxed at a uniform 5% GST rate, regardless of the material type. This low rate was introduced to keep fabrics affordable while still including them in the GST system.
The Government of India has updated GST rates effective after 22 Sep 2025. Below are the expected new GST rates for common fabric types (no compensation cess).
| Fabric Type | HSN Code | New GST Rate (After 22 Sept 2025) |
Old GST Rate (Before 22 Sept 2025) |
|---|---|---|---|
| Cotton fabric | 5208–5212 | 5% | 5% |
| Silk fabric | 5007 | 5% | 5% |
| Woollen fabric | 5111–5113 | 5% | 5% |
| Synthetic/Polyester fabric | 5407–5516 | 5% | 5% |
| Denim fabric | 5209 | 5% | 5% |
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(After 22 Sept 2025) 5%
(Before 22 Sept 2025) 5%
(After 22 Sept 2025) 5%
(Before 22 Sept 2025) 5%
(After 22 Sept 2025) 5%
(Before 22 Sept 2025) 5%
(After 22 Sept 2025) 5%
(Before 22 Sept 2025) 5%
(After 22 Sept 2025) 5%
(Before 22 Sept 2025) 5%
GST on Cotton Fabric
Cotton is one of the most widely used textiles in India. The cotton fabric gst rate is 5%, whether it’s raw cotton fabric, printed cotton, or blended with a small amount of other fibers.
- Pure cotton fabrics – 5% GST
- Cotton blends (minor synthetic mix) – Still 5%
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GST on Polyester Fabric
GST on polyester fabric is also 5%, even though polyester is a synthetic, petroleum-based fiber. Earlier, polyester was taxed higher due to excise duties, but under GST, the rate was reduced to streamline input and output taxes.
GST for Fabric Businesses
- GST registration is mandatory if turnover exceeds ₹40 lakhs
- You must charge 5% GST on sales
- You can claim Input Tax Credit (ITC) on yarn, dyes, packaging, etc., taxed at 18%
However, many small weavers and handloom workers fall under the exemption threshold and are not required to register under GST.
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GST Return and Invoicing for Fabric
- Always issue GST-compliant invoices mentioning the HSN code and GST breakup
- File regular returns (monthly or quarterly based on turnover)
- Maintain stock and purchase records for ITC claims
How to Calculate GST on Fabric
For most fabrics, GST is generally 5%. However, always confirm the exact HSN classification, as some special or technical fabrics may fall under a different rate.
GST Amount = Taxable Value × GST Rate
Final Invoice Value = Taxable Value + GST Amount
Example 1: Cotton fabric at 5%
Suppose the taxable value of cotton fabric is Rs 10,000.
GST = 10,000 × 5% = Rs 500
Final Invoice Value = Rs 10,500
Example 2: Polyester fabric at 5%
Suppose the taxable value of polyester fabric is Rs 25,000.
GST = 25,000 × 5% = Rs 1,250
Final Invoice Value = Rs 26,250
Example 3: Fabric roll sold to a retailer
Suppose the taxable value of a fabric roll is Rs 50,000.
GST = 50,000 × 5% = Rs 2,500
Final Invoice Value = Rs 52,500
Conclusion
By understanding how gst on fabric is applied, whether cotton, silk, or polyester, you can plan better, price right, and stay compliant. Whether you’re in retail or wholesale, these insights help you navigate GST smoothly.
