A Complete Guide to GST on Garments
Abhishek Kumar / 2020-01-30 05:29:50


India is thought to be a country where various types of garments are manufactured due to their different cultures and traditions. All the design and material are different for each culture hence producing variety. Mixing and western and traditional culture is in which they expertise. Let’s learn about the taxes imposed on these garments.

Employment opportunity

Due to the garment production in India, it creates the well number of opportunities for employment which in turn results in economic development and also upgrades the export level of the country.
There are certain rules and regulations which a supplier must follow while supplying garments. Few are mentioned below 

Apparel industry's importance

Apparel is the second largest sector after agriculture contributing a huge amount of revenue to the Indian economy. This sector creates skilled as well as unskilled labor's employment. It is estimated that this industry is responsible for 14% of the sum of annual exports from India which will act as a boost.

Due to this government provides much relaxation to garments exporters to encourage getting GST Registration Online under GST.

Factors that decide the GST rate of garments

These 2 factors are responsible while applying a rule:

1. Sale value
2. Finished or unfinished garments.
Classification of garments

As discussed above, these products are classified according to the sale value and the condition they’re sold in. Let’s take the example of a Pathan (male kurta) which consists of a Kurta and Salwar. Here is the classification of male garments set:

Type-1: Pathan sets, where the top & bottom are unstitched. This consists of a total of 2 pieces of Fabric- Kurta, and Salwar. Here stitching is not yet done and 2 pieces are merely cut into cloth pieces.

Type-2: Pathan sets, where kurta is semi-stitched and salwar not stitched at all. Here the salwar fabric is merely cut into cloth piece and kurta is partially cut into shape but still requires stitching to give it a size and a finishing touch.

Type-3: Pathan sets, where Kurtis stitched and completed but salwar not stitched at all. Here stitching is not yet done and 2 pieces are merely cut into cloth pieces but the kurta is fully ready.

Note: A complete fabric for the garment cannot be considered as complete. Only a fully stitched garment can be worn by somebody.

GST rates applied to garment products

Referring to the above paragraph, here are the GST rates for different types:

In Type-1, Pathan sets, if only 2 pieces of merely cut fabric- Kurta and Salwar supplied by a registered trader, then5% (2.5% CGST + 2.5% SGST) GST shall be applicable.The same would apply to a ladies’ garment where 2 pieces of fabric- Kurti and salwar are supplied.

Applicable GST rate in all other types shall be:-

1. If the value of sale is less than or equals to INR 1,000/- then 5% (2.5% CGST + 2.5% SGST)

2. If the value of sale is greater than INR 1,000/- then 12% (6% CGST + 6% SGST)

GST rates on finished products

As per the GST law, any piece of apparel or clothing accessories shall attract:-

GST @ 5%+ 5% (IGST is import-export is involved) if the value of the goods is less than or equal to INR 1,000/- per piece. 

GST @ 12+12% ((IGST is import-export is involved)if the value of the goods is greater than INR 1,000/- per piece.

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