Fabrics, apparel & footwear below ₹1,000 to get costlier in India

However, GST rate on man-made fibre (MMF) and other realted raw materials has been reduced from the existing 18 per cent to 12 per cent, also with effect from January 1, 2022. 

According to the notification, the new GST rate would cover most of the textile items ranging from Chapter 55 to Chapter 63 of the HS code.

While the GST rate on cotton, cotton yarn and weaving job work will continue at 5 per cent, the rate on man-made fibre and yarn, all types of fabrics and garments and processing job work will be raised to 12 per cent with effect from the first day of the next calendar year.

Major items on which the GST rate has been increased from 5 per cent to 12 per cent include woven fabrics; sewing thread of man-made filaments, whether or not put up for retail sale; synthetic filament yarn (other than sewing thread), not put up for retail sale, including synthetic monofilament of less than 67 decitex; artificial filament yarn (other than sewing thread), not put up for retail sale, including artificial monofilament of less than 67 decitex; knotted netting of twine, cordage or rope—made up of fishing nets and other made up nets, of textile materials; pile fabrics, including long pile fabrics and terry fabrics, knitted or crocheted; and home textiles like blankets, bed linen and curtains.

Since the GST rate on garments and footwear above ₹1,000 is already at 12 per cent, the effect of the latest change in GST rate will be felt by consumers who buy clothing and footwear that costs less than ₹1,000. Earlier the GST rate on clothing and footwear below ₹1,000 was 5 per cent, which is now raised to 12 per cent, i.e. a rise of 7 per cent tax.

The objective behind the proposed increase is to correct the problem of Inverted Duty Structure faced by a small segment of the textile value chain as discussed in the 45th meeting of the GST Council, the notification said.

Fibre2Fashion News Desk (RKS)