Yarn New GST Rate: Cotton, Synthetic, and Blends
- Yarn is taxable under GST, with rates varying based on the type and processing stage.
- As of September 2025, all yarn types, including cotton, synthetic, silk, and coir, are taxed at a 5% GST rate.
- Previously, branded cotton, synthetic, blended, and dyed yarns were taxed at a 12% GST rate.
- Yarn dyeing services are taxed separately at 18% under the SAC code 9988.
- Yarn traders and manufacturers must register for GST if turnover exceeds ₹40 lakh and file regular returns.
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.
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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 has revised GST rates from 22 Sep 2025. Below are the updated 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) |
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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% |
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Cotton Yarn GST Rate
- Unbranded cotton yarn: 5% GST
- Branded cotton yarn: 5% GST
- Hand-spun khadi yarn: Exempt (subject to applicable exemption conditions)
Synthetic and Blended Yarn GST Rate
- Polyester yarn: 5% GST
- Nylon yarn: 5% GST
- Blended yarn (cotton-poly): 5% GST
GST on Silk, Coir, and Jute Yarn
- Silk yarn: 5% GST
- Coir yarn: 5% GST
- Jute yarn: Exempt (subject to applicable exemption conditions)
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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
Yarn traders and manufacturers should ensure proper GST compliance by:
- Registering for GST if applicable turnover thresholds are exceeded.
- Applying the correct 5% GST rate for yarn based on the applicable HSN classification.
- Using proper HSN codes for accurate classification and invoicing.
- Claiming eligible Input Tax Credit (ITC) on inputs such as raw materials, dyeing services, packaging, and power expenses, subject to GST rules.
- Filing regular GST returns such as GSTR-1 and GSTR-3B.
Understanding the correct yarn GST rate helps weavers, textile manufacturers, exporters, and traders maintain accurate invoicing, manage costs, and ensure GST compliance.
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