What is the GST rate on readymade clothes under ₹1,000?

It's 5% if the price per piece is ₹1,000 or less.

What if the MRP is ₹1,200 but the discounted price is ₹999?

GST is applied on the transaction value, so the rate will be 5% in this case.

Do children's garments have a different GST rate?

No. All readymade clothes follow the same GST slab based on price.

Is GST different for cotton vs. polyester garments?

No. Fabric type does not affect GST on finished garments.

Can boutiques claim Input Tax Credit on fabric and tailoring services?

Yes, if they are GST-registered and use these inputs for making and selling clothes.

New GST on Readymade Clothes: Tax by Fabric and Price

If you’ve bought a shirt from a retail store or a kurta from an online shop, you’ve already paid GST on it. But how is it calculated? This guide breaks down everything you need to know about gst on readymade clothes, including pricing slabs, fabric type, and applicable tax rates.

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GST Rates

New GST Rate on Readymade Clothes

The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for readymade garments (Ch. 61/62) with no compensation cess.

Sale Price Per Piece	New GST Rate
Up to ₹1,000	5%
Above ₹1,000	5%

Notes: The earlier 12% slab is discontinued and merged into 5%. Price-based differential for garments is thus unified at 5% (HSN Chapter 61/62) under the rationalised structure.

What is Meant by Readymade Clothes?

Readymade clothes are garments that are already stitched and available for sale in finished form. These include:

Shirts, trousers, kurtas
Dresses, jeans, suits
Uniforms, jackets, and more

Unlike fabric sold by the meter, readymade clothes are taxed based on the final selling price of the complete garment.

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Old GST Rate on Readymade Clothes

(Old GST Rates – Applicable Until 21st September)

Sale Price Per Piece	GST Rate
Up to ₹1,000	5%
Above ₹1,000	12%

So, if you’re buying a kurta for ₹950, the GST will be 5%. But if you buy a branded dress for ₹1,200, GST jumps to 12%.

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Does Fabric Type Affect GST?

No. The type of fabric—whether cotton, polyester, wool, or silk—does not change the GST rate on readymade garments. The rate is determined strictly by the sale value of the garment.

That said, if you’re a manufacturer, the fabric you buy might have a different GST rate (usually 5%), but for finished garments sold to customers, the rate depends only on the price.

GST on Branded vs. Unbranded Clothes

There is no difference in the GST rate based on branding. Whether it’s a local label or a big fashion brand, the tax is applied the same way—5% for items up to ₹1,000 and 12% for items above ₹1,000.

However, branded garments are often priced higher, so most of them fall into the 12% GST slab.

GST Compliance for Clothing Businesses

Register for GST if your turnover exceeds ₹40 lakh
Charge GST at the applicable rate on every sale
File monthly or quarterly returns based on turnover
Use GST-compliant invoices with HSN codes (typically 6101–6208)

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Online vs. Offline Sales

Whether you’re selling from a store or an online platform, gst on readymade clothes applies the same way.

GST registration is mandatory for eCommerce sellers, regardless of turnover
Platforms like Amazon or Flipkart deduct and remit GST on your behalf
You must still file returns and claim Input Tax Credit (ITC) where applicable

Conclusion

Knowing how gst on readymade clothes is calculated helps both consumers and businesses make better pricing decisions and stay compliant with tax rules.

Hitesh Aggarwal

Chartered Accountant

MRN No.: 529770

City: Delhi

As a Chartered Accountant with over 12 years of experience, I am not only skilled in my profession but also passionate about writing. I specialize in producing insightful content on topics like GST, accounts payable, and income tax, confidently delivering valuable information that engages and informs my audience.

Frequently Asked Questions

What is the GST rate on readymade clothes under ₹1,000?

It's 5% if the price per piece is ₹1,000 or less.
What if the MRP is ₹1,200 but the discounted price is ₹999?

GST is applied on the transaction value, so the rate will be 5% in this case.
Do children's garments have a different GST rate?

No. All readymade clothes follow the same GST slab based on price.
Is GST different for cotton vs. polyester garments?

No. Fabric type does not affect GST on finished garments.
Can boutiques claim Input Tax Credit on fabric and tailoring services?

Yes, if they are GST-registered and use these inputs for making and selling clothes.

View all FAQs