Yarn New GST Rate: Cotton, Synthetic, and Blends
Yarn is the backbone of the textile and apparel industry—used in weaving, knitting, sewing, and embroidery. With GST applied across various textile stages, understanding the tax on yarn is important for manufacturers, exporters, and small weavers alike. This blog breaks down the yarn GST rate in India based on type: cotton, synthetic, silk, coir, and dyed yarns.
Is Yarn Taxable Under GST?
Yes. All types of yarn are taxable under GST (Goods and Services Tax) , though rates differ based on material and processing level. Yarn is classified under Chapter 50–56 of the HSN Code , which includes:
- Cotton yarn
- Wool, silk, jute, and flax yarn
- Synthetic yarn (polyester, nylon)
- Coir yarn
- Blended and dyed yarn
New GST Rate on Yarn in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for common yarn categories (no compensation cess).
New GST Rate on Yarn in India: At a Glance
| Yarn Type | HSN Code | New GST Rate |
|---|---|---|
| Cotton yarn (unbranded) | 5205 | 5% |
| Cotton yarn (branded/retail) | 5205 | 5% |
| Synthetic yarn (polyester, viscose) | 5402 / 5509 | 5% |
| Silk yarn | 5004 | 5% |
| Coir yarn | 5308 | 5% |
| Blended yarn | Varies | 5% (classification-dependent) |
| Dyed yarn (all categories) | Respective HSN | 5% (per respective HSN) |
Old GST Rate on Yarn in India: At a Glance
(Old GST Rates – Applicable Until 21st September)
| Yarn Type | HSN Code | GST Rate |
|---|---|---|
| Cotton yarn (unbranded) | 5205 | 5% |
| Cotton yarn (branded/retail) | 5205 | 12% |
| Synthetic yarn (polyester, viscose) | 5402 / 5509 | 12% |
| Silk yarn | 5004 | 5% |
| Coir yarn | 5308 | 5% |
| Blended yarn | Varies | 12% |
| Dyed yarn (all categories) | Respective HSN | 12% |
Cotton Yarn GST Rate
Unbranded cotton yarn: 5% – mostly used in traditional weaving
Branded cotton yarn: 12% – applies to retail or packaged yarn
Hand-spun khadi yarn: Exempt – covered under GST exemption for khadi
Synthetic and Blended Yarn GST Rate
- Polyester yarn: 12% – common in exports and industrial usage
- Nylon yarn: 12% – used in hosiery and performance wear
- Blended yarn (cotton-poly): 12% – uniform tax slab
GST on Silk, Coir, and Jute Yarn
Silk yarn: 5% – supports heritage and luxury weaving
Coir yarn: 5% – widely used in matting and home textiles
Jute yarn: Exempt – due to agricultural relevance
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GST on Yarn Dyeing Services
Yarn dyeing services are taxed at 18% under SAC code 9988 as job work. This is separate from the tax on yarn itself, which may be 5% or 12%.
GST Compliance for Yarn Traders & Manufacturers
- Register for GST registration if turnover exceeds ₹40 lakh
- Apply correct rate (5%, 12%) based on yarn type and branding
- Use proper HSN codes for classification
- Claim Input Tax Credit on raw material, dyeing, packaging, and power
- File GST returns regularly (GSTR-1 and GSTR-3B)
Understanding the yarn GST rate is essential for weavers, textile exporters, and traders across India. It enables proper GST-compliant invoicing , reduces cost via ITC, and ensures pricing accuracy from loom to market.
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I am a Chartered Accountant with 5 years of experience specializing in GST, income tax, and HSN code classification. I help businesses with GST compliance, tax planning, and financial advisory, ensuring they meet regulatory requirements while optimizing their tax strategies. I aim to simplify GST filings, income tax laws, and HSN code classifications, helping professionals and business owners stay informed and compliant.
Frequently Asked Questions
-
What is the GST rate on yarn in India?It ranges from 5% (natural yarn) to 12% (synthetic, dyed, branded yarn).
-
What is the cotton yarn GST rate?
- Unbranded = 5%
- Branded/retail packaged = 12%
-
Is silk yarn taxed under GST?Yes, the silk yarn GST rate is 5%, encouraging traditional weaving sectors.
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What is the GST on yarn dyeing services?It is 18%, as dyeing is considered a job work process under GST.
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Is jute or coir yarn GST-exempt?Jute yarn is exempt, while the coir yarn GST rate is 5%.