New 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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New GST Rate on Clothing in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for garments and apparel (no compensation cess).
| Clothing Type | HSN Code | Sale Price | New GST Rate |
|---|---|---|---|
| Knitted or crocheted garments (e.g., T-shirts, sweaters) | 61 | Up to ₹1,000 | 5% |
| Above ₹1,000 | 5% | ||
| Not knitted or crocheted (e.g., trousers, shirts, dresses) | 62 | Up to ₹1,000 | 5% |
| Above ₹1,000 | 5% | ||
| Worn clothing and used textiles | 6309/6310 | Any price | 5% |
Old HSN Codes and Garment GST Rates
(Old GST Rates – Applicable Until 21st September)
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 | New 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
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What is the GST on readymade garments below ₹1,000?Readymade garments GST rate is 5% for items priced at ₹1,000 or less.
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Does GST apply to all types of clothes?Yes. Whether it's a saree, jeans, or T-shirt, GST on clothing applies. The rate depends on the sale value
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Is GST included in MRP?Yes. The MRP usually includes GST. But if you're billed separately, check the tax breakup.
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Is tailoring service also taxed?Yes. Tailoring services come under a different category and are taxed at 5% GST
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What's the GST rate for clothes over ₹1,000?Clothes priced over ₹1,000 attract 12% GST.
