GST on clothes: 5% up to ₹2,500 a piece, 18% above
· 6 min read
Since 22 September 2025, a garment sold for up to ₹2,500 a piece carries 5% GST, and one sold for more carries 18%. Before that the line was ₹1,000 and the higher rate was 12%. Here is what the change means at a clothing shop's counter, in plain words, with the official sources at the end.
The rule, in one line
Garments and clothing accessories — chapter 61 of the GST tariff for knitted or crocheted ones, chapter 62 for the rest — are taxed by the value of each piece: 5% if a piece's sale value is ₹2,500 or less, 18% if it is more.
The GST Council recommended it at its 56th meeting on 3 September 2025, and Notification No. 9/2025–Central Tax (Rate) put it into force from 22 September 2025. Inside your state, 5% is 2.5% CGST plus 2.5% SGST; to another state it is 5% IGST.
Fabric, and many sarees, are classified under fabric headings with rates of their own: their HSN code decides, not this rule.
Per piece, not per bill
The ₹2,500 line is for each piece. Three kurtis at ₹1,200 each are all at 5%, even though the bill is ₹3,600. A bill with a ₹1,800 kurti and a ₹3,200 sherwani carries both rates.
What counts is the value the piece is sold at. GST is charged on the transaction value (section 15 of the CGST Act), and a discount shown on the bill at the time of sale comes off that value. A ₹2,800 lehenga sold at 15% off — ₹2,380 — is in the 5% slab.
If your tags include GST
Most advisers compare the ₹2,500 with the value before GST. With prices that include GST, that means a tag of up to ₹2,625 stays at 5% (₹2,625 is ₹2,500 plus 5%), and a tag above it goes to 18%.
So a ₹2,599 tag is a 5% piece and a ₹2,699 tag is an 18% piece — a difference worth knowing when you set festival prices. Some advisers read the line on the price with tax instead; agree the reading with your CA.
HSN codes on your bills
Every tax invoice carries the goods' HSN code: at least 4 digits if your turnover last year was up to ₹5 crore, 6 digits above that (Notification No. 78/2020–Central Tax, in force from 1 April 2021). Up to ₹5 crore, bills to customers without a GSTIN may leave the HSN code out.
The right code depends on what the piece is and what it is made of. Set it once per design, and check the doubtful ones with your CA.
Monthly returns
GSTR-1 reports your sales; GSTR-3B pays the tax. Filing monthly, GSTR-1 is due by the 11th of the next month and GSTR-3B by the 20th. With a turnover up to ₹5 crore you may choose quarterly returns with monthly payment (the QRMP scheme).
Due dates are sometimes extended: the GST portal shows the current ones.
E-invoicing
If your turnover has crossed ₹5 crore in any year since 2017-18, every invoice to a GST-registered buyer needs an IRN and QR code from the Invoice Registration Portal (from 1 August 2023, Notification No. 10/2023–Central Tax). Bills to customers without a GSTIN are not e-invoiced.
This guide explains the rules in general. It is not tax advice: check how they apply to your shop with your CA.
Sources
The official texts this guide relies on. Rules change: check the current version, and your own case with your CA.
- Notification No. 9/2025–Central Tax (Rate), 17 September 2025 (Schedule I, S. No. 389; Schedule II, S. No. 198) (opens in a new tab) — Central Board of Indirect Taxes and Customs
- Recommendations of the 56th meeting of the GST Council, 3 September 2025 (opens in a new tab) — GST Council
- Central Goods and Services Tax Act, 2017 — section 15 (value of taxable supply) (opens in a new tab) — Central Board of Indirect Taxes and Customs
- Notification No. 78/2020–Central Tax, 15 October 2020 (HSN digits on tax invoices) (opens in a new tab) — GST Council
- Notification No. 10/2023–Central Tax, 10 May 2023 (e-invoicing above ₹5 crore turnover, from 1 August 2023) (opens in a new tab) — Central Board of Indirect Taxes and Customs
- GST portal — returns and due dates (opens in a new tab) — Goods and Services Tax Network