The two rules to remember
- Fabric (cloth, including most sarees) is 5% GST at any price.
- Readymade garments and made-up articles are 5% up to ₹2,500 a piece and 18% above, on the value of the piece without GST and after any discount.
Before 22 September 2025 the garment limit was ₹1,000, with 5% and 12%. The 12% rate for clothes no longer applies.
HSN codes and GST rates for a clothing shop
| What you sell | HSN (chapter / heading) | GST |
|---|---|---|
| Silk fabric and silk sarees | 5007 | 5% |
| Cotton fabric and cotton sarees | 5208 – 5212 | 5% |
| Polyester and other synthetic filament fabric (and sarees) | 5407 – 5408 | 5% |
| Synthetic staple fibre fabric (e.g. polyester-viscose suiting) | 5512 – 5516 | 5% |
| Wool fabric | 5111 – 5113 | 5% |
| Knitted fabric | 6001 – 6006 | 5% |
| Knitted garments (T-shirts, innerwear, leggings…) | Chapter 61 | 5% up to ₹2,500 a piece, 18% above |
| Woven garments (shirts, trousers, kurtis, blouses…) | Chapter 62 | 5% up to ₹2,500 a piece, 18% above |
| Made-ups (bedsheets, towels, curtains…) | Chapter 63 | 5% up to ₹2,500 a piece, 18% above |
Check the exact 4- or 6-digit code for each item with your accountant or your supplier's invoice. The heading depends on the material and how the piece is made.
Is a saree fabric or a garment?
A saree is usually classed as woven fabric under the heading of its material (5007 for silk, 5208 – 5212 for cotton, 5407 for polyester), so it is 5% whatever the price. A saree that has been stitched into a ready-to-wear piece, or one sold together with a stitched blouse, may be classed differently. If you sell those, ask your accountant.
How the ₹2,500 limit works
- Per piece, not per billFour ₹1,000 shirts make a ₹4,000 bill, but each piece is under ₹2,500, so all four are 5%.
- After discountA kurta at ₹2,800 before GST with 15% off sells for ₹2,380, so it is 5%.
- Without GSTIf your price includes GST, take 5% out first: ₹2,600 ÷ 1.05 = ₹2,476, so a ₹2,600 shirt is 5%. Up to ₹2,625 with GST is 5%.
Try any price in the GST calculator for clothes.
How many HSN digits on the bill
- Turnover up to ₹5 crore: 4 digits on bills to registered businesses (B2B); optional on bills to customers (B2C).
- Turnover above ₹5 crore: 6 digits on every bill.