The limit is on the value before GST
₹2,500 is the value of one piece after any discount and without GST. A shirt priced ₹2,600 with GST is ₹2,476 before 5% GST, so it stays at 5%.
Free tool
GST calculator for clothes
Enter the price of a piece to see whether it is 5% or 18% GST, and the CGST and SGST (or IGST) on it. Based on the GST rates from 22 September 2025.
The ₹2,500 rule for garments
From 22 September 2025, readymade garments and made-up textile articles (such as bedsheets and towels) sold for up to ₹2,500 a piece are charged 5% GST. Above ₹2,500 a piece, the rate is 18%. Before that date the limit was ₹1,000, with 5% and 12%.
Per piece, not per bill
A bill of four ₹1,000 shirts comes to ₹4,000, but each piece is under ₹2,500, so all four are 5%.
A discount can change the rate
A kurta at ₹2,800 before GST with 15% off sells for ₹2,380, so it drops to 5%.
Fabric is 5% at any price
Woven fabric and cloth sold by the metre are 5% whatever the price, and sarees are usually classed as fabric. Check your items' HSN codes with your accountant.
When your price includes GST
Most clothing shops print the price with GST. To find the slab, take the GST out at 5% first: price ÷ 1.05. If that is ₹2,500 or less, the piece is 5%. So a price with GST of up to ₹2,625 is 5%. Above that, the piece is 18%, and the GST inside the price is price × 18 ÷ 118. Between ₹2,626 and ₹2,950 the two ways of counting disagree, so many shops avoid prices in that band.
Within your state, or to another state
Within your own state, the GST is split in half: 5% is 2.5% CGST + 2.5% SGST, and 18% is 9% + 9%. When you sell to another state, it is all IGST.
Let the billing software do it
Tizo POS works out the slab for every piece on every bill, after discounts, and prints the HSN code, CGST and SGST. Your accountant gets the GST summary at the end of the month. See billing software for textile shops.
Questions shop owners ask
Is GST on clothes 5% or 12%?
From 22 September 2025, it is 5% for garments up to ₹2,500 a piece and 18% above. The old 12% rate for clothes above ₹1,000 no longer applies.
What is the GST on sarees?
Sarees are usually classed as fabric, which is 5% whatever the price. A readymade saree with stitched parts may be classed differently, so check the HSN code with your accountant.
Is the ₹2,500 limit on the MRP?
No. It is on the value of the piece without GST, after any discount.
Does a bill of ₹10,000 become 18%?
No. The slab is checked for each piece, not for the whole bill.
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