GST in Garments and Apparel in India
If you’re buying or selling clothes in India, knowing how GST in garments works is super important. From everyday wear to designer outfits, garments are taxed based on their price. Let’s simplify how it all works.
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What Is the GST Rate on Garments?
The GST rate on garments depends on their sale value per piece:
- If the item costs ₹1,000 or less – GST is 5%
- If the item costs more than ₹1,000 – GST is 12%
This rule applies to most kinds of clothing, including readymade garments, sarees, trousers, shirts, and more.
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HSN Codes and Garment GST Rates
Each type of clothing is classified under a code called HSN (Harmonized System of Nomenclature). Here’s how garments GST rate is applied based on these codes:
| Clothing Type | HSN Code | Sale Price | GST Rate |
|---|---|---|---|
| Knitted or crocheted garments (e.g., T-shirts, sweaters) | 61 | Up to ₹1,000 | 5% |
| Above ₹1,000 | 12% | ||
| Not knitted or crocheted (e.g., trousers, shirts, dresses) | 62 | Up to ₹1,000 | 5% |
| Above ₹1,000 | 12% | ||
| Worn clothing and used textiles | 6309/6310 | Any price | 5% |
Note: The price considered is the transaction value (the price you actually sell it at), not the printed MRP.
GST on Readymade Garments
Readymade garments GST rate follows the same 5% and 12% structure. Whether you’re buying from a mall or selling online, if the selling price is:
- Up to ₹1,000, the GST is 5%
- Above ₹1,000, the GST becomes 12%
So, if you’re buying a ready-to-wear shirt for ₹950, you’ll pay 5% GST on clothes below 1000. If it’s ₹1,200, the rate increases to 12%.
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GST on Clothing: Business Perspective
From a business view, GST has simplified operations:
- Sellers can claim Input Tax Credit on raw materials like fabric, thread, and buttons
- Taxation is uniform across India
- Filing is easier through online GST returns
But, there’s one challenge — inverted duty structure. Sometimes, raw materials are taxed higher than finished garments, which means businesses may have to claim refunds.
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How GST Affects Clothing Pricing
Let’s say you sell a cotton kurta:
- Selling price: ₹950
- GST @5%: ₹47.50
- Final Price: ₹997.50
Now for a designer dress:
- Selling price: ₹2,500
- GST @12%: ₹300
- Final Price: ₹2,800
- This shows how the clothing GST rate affects the end cost and margins.
Unique Features Of BUSY Accounting Software For the Garment Industry
- Style-wise inventory management for tracking SKUs by size, colour, and design.
- Multiple units of measurement (UOM) support for meters, pieces, or sets.
- Barcode generation and scanning for fast and accurate billing.
- Godown-wise stock management for different warehouses or outlets.
- MRP and discount handling for retail and wholesale pricing strategies.
- Garment-specific billing formats, including size and colour breakup.
- Job work and subcontracting module for tracking outsourced stitching or embroidery.
- Real-time stock reports with variant-wise availability.
- Sales analysis by brand, category, or style for better decision-making.
Hi there! I’m a Chartered Accountant with over 20 years of experience in financial accounting and a passion for writing. I enjoy simplifying complex topics like GST and income tax, believing that learning should be a lifelong journey. I'm here to share insights and make financial matters easier for everyone!
Frequently Asked Questions
- What is Garment Software?Garment software is a specialized solution that helps clothing and apparel stores manage inventory, sales, and order processing efficiently. It streamlines operations, tracks stock levels, and ensures smooth management of customer relationships and billing.
- Why Do Clothing and Apparel Stores Need Garment Software?Garment software simplifies stock management, order processing, invoicing, and customer relationships. It improves efficiency, reduces errors, and helps stores stay organized, making it easier to manage large inventories and high sales volumes.
- What Benefits Will You See After Deploying BUSY For Garment Stores?BUSY enhances efficiency, streamlines order management, automates billing, and tracks inventory in real-time. It helps businesses save time, improve accuracy, and manage operations effortlessly, boosting overall productivity.
- Who Can Use the BUSY Garment Software?BUSY garment software is ideal for clothing and apparel stores, manufacturers, wholesalers, and retailers. It is designed for businesses of all sizes that need to manage inventory, sales, and customer relations.
- How User-Friendly is the BUSY Garment Store Software? Will it Require Training for the Staff?BUSY is designed to be intuitive and easy to use. While most staff can navigate it quickly, basic training may be helpful to ensure full utilization of its features for smoother operation.
- Can We Customize the Software to Address Our Garment Store’s Unique Needs?Yes, BUSY allows customization to meet the specific needs of your garment store, from inventory handling to billing. It offers flexibility to align with your business processes.
