GST on Clothes in India

Working out the GST on clothes

The rate turns on the price of each piece, and the calculator below uses 5% — the rate up to ₹2,500 per garment. Above ₹2,500 a piece it is 18%, so check the per-piece value first. Multiply the taxable value by 5 percent to get the GST, then add it to the base price for the total.

• For an intra-state sale, the 5% splits into 2.5% CGST and 2.5% SGST.
• For an inter-state sale, a single 5% IGST applies instead.
• The calculator on this page is pre-set to the 5% rate and handles both cases.

A worked example

Suppose a garment has a taxable value of ₹1,500 before tax. Applying 5% GST works out as follows.

The ₹2,500 threshold that decides your rate

Clothing GST turns on one number: the sale value per piece. GST 2.0 tripled the concessional threshold from ₹1,000 to ₹2,500 and abolished the old 12% slab entirely, which means most everyday and even mid-range branded clothing now falls in the 5% bracket. Only genuinely premium garments cross into 18%. The table sets out the structure.

Fabric type does not matter, price does

A common misconception is that cotton is taxed differently from polyester or silk. It is not. The rate is decided strictly by the per-piece sale value, not the material or whether the garment is branded. A ₹1,999 branded cotton shirt and a ₹1,999 unbranded polyester shirt both attract 5%. Cross to ₹2,600 and either one becomes 18%. The threshold applies per piece, so a two-piece set billed as separate items is assessed separately.

The saving from the tripled threshold

On a ₹1,999 shirt the old structure charged 12% above ₹1,000, meaning ₹240 in tax. The new 5% rate charges ₹100, a saving of ₹140 on a single garment. Because ₹2,500 covers the overwhelming majority of clothing sold in India, most shoppers now pay the lower rate on everything they buy.

Input tax credit and the inverted duty problem

Garment sellers can claim input tax credit on raw materials such as fabric, thread and buttons. One structural issue persists: some man-made fibre inputs are taxed higher than the 5% charged on the finished garment, creating an inverted duty structure where credit accumulates faster than it can be used. Raw jute and raw silk are exempt from GST entirely, while raw cotton attracts 5% payable by the buyer under reverse charge. The composition scheme is available to clothing businesses with turnover up to ₹1.5 crore.

Selling clothes online

A seller listing on Myntra, Amazon or any marketplace generally needs GST registration from the first sale, rather than waiting for the ₹40 lakh threshold. The platform collects tax at source under Section 52 against your GSTIN. Returns are common in apparel and need handling properly: a returned garment is dealt with through a credit note, which reverses the original supply and the GST on it, and must be reported in the period it is issued. High return rates make clean credit-note discipline essential for apparel sellers.

Job work and the garment supply chain

Most garment production involves job work, where fabric is sent to a stitching unit. Job-work services in the textile sector attract 5% GST. The principal sends goods under a delivery challan rather than an invoice, since no supply occurs, and the job worker charges GST only on their service. Goods must return within the prescribed period or the transaction is deemed a supply. Getting this wrong is a common source of disputes in the apparel chain.

Exports

Garment exports are zero-rated. An exporter can either supply under a Letter of Undertaking without paying IGST and claim a refund of input credit, or pay IGST and claim it back. Given India's apparel export volumes, this route matters, and the accumulated credit from the inverted duty structure makes the refund mechanism especially relevant for man-made fibre exporters.

Frequently asked questions