According to the proposed tax rates, 5 per cent GST will be levied on garments and apparel of up to ₹1,000, beyond which they will be taxed at 12 per cent. The same rates will also hold true for other readymade apparel such as salwar kurtas, dresses, skirts, tops and jeans.

According to the proposed tax rates, GST rate on readymade garments and apparel will be 5 percent up to ₹1,000, beyond which they will be taxed at 12 percent. The same rates will also hold true for other readymade apparel such as salwar kurtas, dresses, skirts, tops, and jeans. Further, synthetic and other manmade fibers will attract a higher tax of 18 per cent while other natural fibers (except silk and jute) will be taxed at 5 percent.

GST Impact on Garments

 

Category

Current Rates

GST

 

Cotton and Natural Fibre

Nil

5%

 

All Categories of Yarn

Nil

5%

 

Silk and Jute

Nil

5%

 

Manmade Yarn, Synthetic Yarn, Manmade Fibre

Nil

5%

 

Fabric

Nil

5%

 

Branded Garments more than Rs. 1000

2% without CENVAT and 12.5% with CENVAT (Chapter 61,62,63) : 7.5 % (60% Tariff Value)

12%

 

Other Garments

Garments/ articles of Cotton and not containing  other textile : Nil (W/o Cenvat) and 6% w.o. CENVAT

Others : Nil (W/o Cenvat) and 12.5% w.o. CENVAT

5% (No overflow of credit allowed)

 

Job work on Readymade Garment
Job work for embroidery work undertaken by the manufacturer on garments will attract 18% GST - that is for the service rendered he has to pay 18% for embroidery  but if the same embroidery is done on cloth it will have a 5% GST.

 So, if a Readymade garment trader buys cloth per meter less than Rs 1000 and sells the same after adding profit of Rs200 , GST will be taxed at 12% rate on sales price(Rs 1200).No cash refund of ITC is available in both 5% and 12% slab rate as per GST council meeting held on 3rd June 2017.

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