India is known for its wide and diversified life style. It is one of the few countries of the world that have a culture with a unique melange of conventionality and innovation.
One of the most in-things for which India is known all over the globe is its unique sense of fashion and the vibrant dressing sense. In fact, the people of India are very particular about their attire. This is why the Apparel sector of India is the oldest and a noteworthy source of the Indian economic development.
1. What is importance of Indian apparel industry?
We all must know the importance of Indian apparel industry.
The Apparel sector of India is the huge sector of Indian economy.
It is the second-largest sector after agriculture;
The textile business generates employment for both skilled and unskilled work.
From the perspective of trade and commerce, apparel industry contributes over 14% of the all out yearly exports from India.
This share is likely to get a lift in the coming years.
It has a noteworthy share in GDP, besides it creates numerous employment opportunities.
It likewise induces export advancement in India.
Whatever be the occasion say marriage, birthday, festival or a get together, clothes matter a lot! But while buying new apparel, you must focus on the price consideration. In India, if you're buying new clothes, GST rules have a key role in deciding the price of your product. To make a wise bargain, you must know the ground rules of GST on garments.
2. How clear is GST for the garments sellers?
The traders and manufacturers of readymade garments, cloth, and other related items who are having GST registration, have repeatedly made queries to the GST department. This is regarding the relevance of GST on Garments.
Hence, the government has now recently elucidated the GST rules for Garments industry.
3. How do GST rules impact on the garments?
The GST rules for the garments items are indicated by 2 factors:
State of the garments, whether finished or incomplete.
Value of the sale
So, here are some important aspects you need to consider while buying your garments.
3. How to classify the items of garments?
The garments items are classified as per their condition, whether finished or not. In like manner, the GST rates apply. Let's take example of Ladies suit. Here's the characterization Ladies garments set:
Category 1: Salwar or churidar sets, where both top and base are not stitched. This comprises of 3 pieces of texture Kurta, Salwar and Dupatta. Here no sewing is done and 3 pieces are merely cut into textures from the bale.
Category -2: Salwar or churidar sets, where Top is semi-stitched and base not stitched. Here base and dupatta textures are cut from bales, whereas Top is mostly cut into shape, still requires further slicing and sewing to size.
Category -3: Salwar or churidar set, where Top (Kurta) is completely stitched yet base not stitched. Here, the base and dupatta textures are cut from bale.
Category -4: Salwar or churidar set, where Neck work is done on Top (Kurta). Here, both top and base are not stitched. The base and dupatta textures are cut from bales.
Reminder: Here, 3 pieces of texture Kurta, Salwar and Dupatta need can't be considered as "complete ladies garments", and will be supplied as "texture". They can't be worn moving forward without any more process of sewing.
4. What will be the GST rates on garments items?
The GST rate on different categories of the garments items discussed above are given below:
In Category-1, salwar or chudidar sets, just 3 pieces of texture Kurta, Salwar and Dupatta are supplied by the trader having GST registration. Here, the applicable GST tax rate will be charged @ 5% (2.5% CGST + 2.5% SGST).
Same would apply to a men's garment where 3 pieces of texture Blazers, trousers and a bow shirt are supplied.
In every single other category, the applicable GST rate will be:-
5% (2.5% CGST + 2.5% SGST) if the value of sale is equal to ₹1,000/ -
12% (6% CGST + 6% SGST) if the value of sale is higher than ₹1,000/ -
5. What will be the GST rates on completed garments items?
As per the GST law, any piece of apparel or garments accessories will draw in:-
GST @ 5% if the taxable value of the clothes is up to ₹1,000/ - per piece.
GST @ 12% if the taxable value of the clothes is beyond ₹1,000/ - per piece.
The same has been summarized below in table structure:
HSN chapters
Particulars
GST Rate
61,62 & 63
Things of attire & fashion accessories if price of garments is up to ₹1,000/-
2.5%
2.5%
5%
61,62 & 63
Things of attire & fashion accessories if price of garments is greater than ₹1,000/-
6%
6%
12%
6. Whether these rules are properly followed?
No. As per the GST department, various traders having GST registration have been wrongly charging 5% GST on those garments, whose taxable value was far more than ₹1,000/ - per piece.
This is the complete guide for every one of the traders and manufacturers of garments. Besides, this is a ready reference for the customers who are buying new garments.
Ground rule of GST on garments:-
As per the GST Advance Ruling:
Whether the Salwar/Churidhar sets, containing three pieces of materials viz., Bottom and Dupatta, whether halfway stitched/neck work done, or not would remain as "fabric" under Chapters 50,52,54,55 based on the constituent material and draw in an all out 5% of GST, or
They are classifiable under Chapters 61 to 63, thereby pulling in an aggregate of-
5% if their sale price is less than Rs. 1,000/ - and
12% GST if their sale price is more than Rs. 1,000/ - .
