GST Textiles
Fabric 5% · Apparel 5/18%

TEXTILE GST, on the GST 2.0 structure effective 22 September 2025: (1) FABRIC (cotton, silk, synthetic): 5%. (2) APPAREL/GARMENTS up to ₹2,500 per piece: 5%. (3) APPAREL above ₹2,500 per piece: 18%. (4) MANMADE FIBRE: 5% (cut from 18%). (5) MANMADE/SYNTHETIC YARN: 5% (cut from 12%). (6) MADE-UPS (bedsheets, towels): 5% up to ₹2,500, 18% above. (7) JOB WORK (textiles, Chapters 50-63): 5%. Tailoring services: 5%. (8) HANDLOOM: 5% (concessional).

KEY THRESHOLD: ₹2,500 per piece for garments determines 5% vs 18% — it was ₹1,000 before 22 Sep 2025. EXAMPLE: ₹1,500 shirt = 5% GST = ₹75 (under the old rules the same shirt carried 12% = ₹180).

Source: GST Council 56th meeting, Annexure 7 (Textile Sector); Notification 9/2025-Central Tax (Rate).

APPAREL ₹2,500 RULE (GST 2.0, w.e.f. 22 September 2025): (1) Per piece SALE VALUE ≤ ₹2,500: 5% GST. (2) Per piece > ₹2,500: 18% GST. (3) Threshold based on SALE PRICE (not cost). (4) BRANDED premium apparel above ₹2,500: 18%. (5) MASS-MARKET and mid-market clothing: now overwhelmingly 5%, because the threshold rose from ₹1,000 to ₹2,500. EXAMPLE: (a) ₹800 t-shirt: 5% = ₹40. (b) ₹2,000 jeans: 5% = ₹100 — under the old ₹1,000 threshold this was 12% = ₹240. (c) ₹4,000 jacket: 18% = ₹720.

WHAT CHANGED: the 12% slab was abolished, so the step at the threshold is now 5% vs 18%, not 5% vs 12%. STRATEGIC: pricing near ₹2,500 — factor the GST jump.

Footwear follows the same ₹2,500 line (per pair).

INVERTED DUTY STRUCTURE (textiles): (1) Historically INPUTS (manmade fibre 18%, manmade yarn 12%) were taxed HIGHER than OUTPUT (fabric 5%). (2) That created ITC ACCUMULATION (input GST > output GST). (3) GST 2.0 fixed most of it: from 22 September 2025 manmade fibre dropped 18% → 5% and manmade yarn 12% → 5%, matching the 5% fabric output — the GST Council named this a correction of the long-pending inversion in the manmade textile chain. (4) Residual inversion (dyes, chemicals, packaging at 18%) still leaves accumulated ITC. (5) REFUND available via GST RFD-01. STRATEGIC: textile manufacturers should re-model refund claims for periods after 22 Sep 2025 — the accumulation is far smaller now.

Maintain detailed input-output records.

TEXTILE JOB WORK: (1) JOB WORK on textiles and textile products (Chapters 50-63) — dyeing, printing, processing for others: 5% GST, unchanged by GST 2.0. (2) TAILORING SERVICES: 5%. (3) PRINCIPAL sends material, job worker processes. (4) ITC available. WATCH OUT: residual job work — anything not in a listed category — moved from 12% to 18% on 22 September 2025, so confirm your work actually falls in the textile entry.

HANDLOOM + KHADI: (1) 5% concessional (some exemptions). (2) Khadi (KVIC): special treatment. POWERLOOM: standard rates.

STRATEGIC: job work units benefit from 5% rate + ITC. Document job work challans (Form ITC-04).

Source: Notification 15/2025-Central Tax (Rate), serial 26 (Heading 9988).

TEXTILE GST STRATEGY (post 22 September 2025): (1) APPAREL pricing: factor the ₹2,500 threshold (5% vs 18%) — it moved up from ₹1,000, so re-price and re-tag inventory. (2) INVERTED DUTY: much smaller now that fibre and yarn are both 5%, but still claim ITC refund (RFD-01) where it accumulates. (3) JOB WORK: 5% + ITC for textiles; residual job work is 18%. (4) E-WAY BILL for inter-state. (5) E-INVOICING > ₹5cr turnover. (6) COMPOSITION scheme for small (< ₹1.5cr): 1% (traders) / 5% (manufacturers). (7) HANDLOOM concessions. (8) EXPORT: zero-rated (LUT) — major for textile exporters. (9) FABRIC 5% uniform. (10) ENGAGE textile-specialist GST CA. India textile sector huge — GST compliance critical for manufacturers, exporters, retailers.