New GST on Garments and Apparel in India
Quick Summary
- New GST rates effective after September 22, 2025, will have two GST rates 5% or 18%, depending on the price.
- The GST rate applies to all types of clothing, including ready-made garments, sarees, and designer outfits.
- Businesses benefit from GST through simplified operations and the ability to claim Input Tax Credit, though they face challenges like the inverted duty structure.
- GST affects clothing pricing by increasing the final sale price based on the GST rate applied to the selling price.
If you’re buying or selling clothes in India, knowing how GST on clothes 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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New GST on Clothing in India
Under the revised GST structure effective from 22 Sep 2025, ready-made garments are generally taxed at 5% if the sale value does not exceed Rs 2,500 per piece, and at 18% if it exceeds Rs 2,500 per piece. Worn clothing and used textiles under HSN 6309/6310 generally remain subject to 5% or 18% GST.
GST Rate on Clothing
| Clothing Type | HSN Code | Sale Value | New GST Rate (After 22 Sep 2025) |
Old GST Rate (Before 22 Sep 2025) |
|---|---|---|---|---|
| Knitted or crocheted garments such as T-shirts, sweaters, innerwear | 61 | Up to Rs 2,500 per piece | 5% | 5% up to Rs 1,000 per piece |
| Knitted or crocheted garments such as T-shirts, sweaters, innerwear | 61 | Above Rs 2,500 per piece | 18% | 12% above Rs 1,000 per piece |
| Not knitted or crocheted garments such as shirts, trousers, dresses, saree blouses | 62 | Up to Rs 2,500 per piece | 5% | 5% up to Rs 1,000 per piece |
| Not knitted or crocheted garments such as shirts, trousers, dresses, sarees | 62 | Above Rs 2,500 per piece | 18% | 12% above Rs 1,000 per piece |
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5% up to Rs 1,000 per piece
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 12% above Rs 1,000 per piece
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5% up to Rs 1,000 per piece
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 12% above Rs 1,000 per piece
GST on Readymade Garments
Readymade garments GST rate follows the same 5% and 18% structure. Whether you’re buying from a mall or selling online, if the selling price is:
- Up to ₹2500, the GST is 5%
- Above ₹2500, the GST becomes 18%
So, if you’re buying a ready-to-wear shirt for ₹950, you’ll pay 5% GST on clothes below 1000. If it’s ₹3,200, the rate increases to 18%.
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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 to Calculate GST on Clothing
Because the rate depends on the sale value per piece, the same clothing category can fall into different tax outcomes depending on price.
Example 1: Garment within 5% slab
Suppose you sell a cotton kurta for Rs 950.
GST @ 5% = Rs 47.50
Final Price = Rs 997.50
Example 2: Garment still within 5% slab after the update
Suppose you sell a shirt for Rs 2,200.
GST @ 5% = Rs 110
Final Price = Rs 2,310
Example 3: Garment in 18% slab
Suppose you sell a designer dress for Rs 3,000.
GST @ 18% = Rs 540
Final Price = Rs 3,540
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.
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.
