GST on clothing: 5% or 18%, decided by each piece's price
Readymade garments, bedsheets and footwear are taxed at 5% up to ₹2,500 a piece and 18% above it. The rate follows what the piece actually sells for — after your discount, before GST — so a markdown can change it. Here is the rule, the codes, and the cases that trip shops up.
- Written by
- Gurpreet Kait
- Written for
- Registered clothing, saree, footwear and home-textile shops
- Facts checked
- 08 Nov 2026
- Sources
- 7, 6 primary
Most goods have a GST rate. Clothing has a price line. Since 22 September 2025 a garment, a made-up like a bedsheet or towel, and a pair of shoes go at 5% when one piece sells for up to ₹2,500, and at 18% above that. The rate is not a property of the product — the same kurta can be 18% at full price and 5% in the sale.
| What you sell | Chapter | Up to ₹2,500 a piece | Above ₹2,500 |
|---|---|---|---|
| Readymade garments, knitted (T-shirts, hosiery, innerwear) | 61 | 5% | 18% |
| Readymade garments, not knitted (shirts, kurtas, trousers, sarees' blouses) | 62 | 5% | 18% |
| Made-ups — bedsheets, towels, curtains, dupattas | 63 | 5% | 18% |
| Footwear (per pair) | 64 | 5% | 18% |
| Fabric sold by the metre — cotton, silk, wool, man-made | 50–55, 58, 60 | 5% | 5% |
| Tailoring and alteration charges | SAC 9988 | 5% | 5% |
“Article of apparel and clothing accessories or made up articles, knitted or crocheted, of sale value not exceeding Rs 2500 per piece”
Which price decides the rate?
The sale value — what the piece actually sells for — not the MRP on the tag. CBIC's own rates FAQ says the value in these entries is "the transaction value and not the retail sale price". And a discount shown on the invoice is not part of the value of supply at all (CGST Act, section 15(3)(a)).
- A ₹2,700 shirt at full price is a ₹2,700 supply: 18%.
- The same shirt at 10% off on the bill is a ₹2,430 supply: 5%.
- Three T-shirts at ₹1,200 on one line are a ₹3,600 line, but each piece is ₹1,200: 5%. The test is per piece, never per bill.
What if my prices include GST?
Then the pre-tax value depends on the rate you are trying to decide. A tag of ₹2,625 is ₹2,500 before 5% GST, so it is 5%. Between ₹2,625 and ₹2,950 a piece fits neither rate — over the line at 5%, under it at 18%. No circular settles this. The careful reading charges 18% in that band, because it never pays less tax than the law asks; ask your CA before you choose otherwise.
Exchanges and returns
A garment brought back is a credit note against the bill it was sold on (section 34), at the rate that bill charged. It has to be issued by 30 November after the end of the financial year. An exchange is that credit note plus a new bill for the piece the customer takes instead.
Sources
Checked on 08 Nov 2026. Government text is marked primary; everything else is somebody explaining it, and is marked as such. GST and telecom rules change often — confirm anything you are about to act on.
- primaryNotification 9/2025-Integrated Tax (Rate), ICAI copy
- primaryGST Council, 56th meeting press release (3 September 2025)
- primaryGST Council, 57th meeting press release (8 October 2026)
- primaryCBIC — GST rates FAQ
- primaryCGST Act, section 15 (value of supply)
- primaryCGST Act, section 34 (credit notes)
- secondaryNotification 15/2025-Central Tax (Rate) — tailoring services