GST on clothes in 2026: 5% up to ₹2,500, 18% above

GST on clothes is 5% when a single piece sells for ₹2,500 or less before tax, and 18% when it sells for more. The test is per piece, not per bill, and it has applied since 22 Sep 2025, when GST 2.0 replaced the old ₹1,000 limit and the 12% slab.

Many pages ranking for this still quote ₹1,000 and 12%. Others get the rate right but skip what a shop owner actually has to decide at the counter: what "sale value" means once you give a discount, what to do with tax-inclusive tag prices, and whether a saree, a kurta set or a pair of shoes falls under the same rule. This guide answers each from the notification itself.

What is the GST on clothes in 2026?

The 56th GST Council meeting on 3 Sep 2025 moved most goods to two slabs, 5% and 18%, from 22 Sep 2025. For clothing it did two things: it raised the per-piece limit from ₹1,000 to ₹2,500, and it moved everything above the limit from 12% to 18%.

The legal text is Notification 9/2025-Central Tax (Rate), dated 17 Sep 2025 and in force from 22 Sep 2025. Schedule I (2.5% CGST, so 5% in total with SGST) lists:

• Chapter 61: "Article of apparel and clothing accessories, knitted or crocheted, of sale value not exceeding Rs 2500 per piece"
• Chapter 62: "Articles of apparel and clothing accessories, not knitted or crocheted, of sale value not exceeding Rs. 2500 per piece"
• Chapter 63 (other than 6305 32 00, 6305 33 00 and 6309): "Other made up textile articles, sets, of sale value not exceeding Rs. 2500 per piece"

Schedule II (9% CGST, so 18% in total) has the same three entries with "exceeding Rs. 2500 per piece". Chapter 63 covers things like bedsheets, curtains and towels, so a home-textile shop is on the same rule. Worn clothing and rags (6309) stay at 5% whatever the value.

Within your state, 5% is billed as 2.5% CGST plus 2.5% SGST, and 18% as 9% plus 9%. On a sale to another state it is 5% or 18% IGST.

Does the ₹2,500 limit apply per piece or per bill?

Per piece. The notification says "per piece", so you test each garment on its own, however big the bill. A customer buying four shirts at ₹1,000 each pays 5% on every shirt even though the bill is ₹4,000. A customer buying one ₹3,000 jacket pays 18% on it even if the jacket is the only thing on the bill.

That also means one bill can carry both rates. Your invoice then has to show the tax separately for each rate, which most billing software does by printing a line per rate under the totals.

What counts as the "sale value" of a piece?

The notification doesn't define "sale value". The natural reading is the value of the piece for GST: the price the customer pays for it, before GST is added.

Section 15 of the CGST Act sets that value as the transaction value. Under section 15(3)(a), a discount given before or at the time of sale and "duly recorded in the invoice" is left out of the value. So the test is the price of the piece after any discount printed on the bill, and before GST.

Two edges follow from the wording "not exceeding":

• ₹2,500.00 exactly is 5%.
• ₹2,500.01 is 18%.

The three shirts total ₹3,600 before GST, well above ₹2,500, but each shirt is ₹1,200, so all three are at 5%: ₹3,600 × 5% = ₹180. The leather jacket is the trap in the list: leather garments sit under heading 4203, not chapters 61 or 62, so the ₹2,500 test doesn't apply and they are at 18% at any price.

What if your tag prices already include GST?

Most clothing shops print one price on the tag and that is what the customer pays. GST is then carved out of the tag price, and the ₹2,500 test applies to what is left. The arithmetic gives two clean lines and a band between them:

• Up to ₹2,625: 5%. ₹2,500 + 5% = ₹2,625. Any tag at or below this leaves a pre-GST value of ₹2,500 or less.
• Above ₹2,950: 18%. ₹2,500 + 18% = ₹2,950. Any tag above this leaves a pre-GST value above ₹2,500 even at 18%.
• Above ₹2,625 and up to ₹2,950: grey. Take out 5% and the value is above ₹2,500, so 5% can't apply. Take out 18% and the value is ₹2,500 or less, so 18% can't apply either.

What happens when a discount takes a piece across ₹2,500?

Because the test runs on the value after a discount shown on the bill, a discount can move a piece from 18% to 5%. A blazer priced at ₹2,800 before GST is at 18%. Give 10% off on the bill and it is ₹2,520, still 18%: GST ₹453.60, customer pays ₹2,973.60. Give 15% off and it is ₹2,380, now 5%: GST ₹119.00, customer pays ₹2,499.00.

Two things make this harder in practice. A bill-level discount has to be split across the pieces before you can test each one, and a discount given later by credit note doesn't change the value on the original bill. We cover both in how a discount moves a garment across the ₹2,500 line and splitting one discount across items at different GST rates.

What is the GST on fabric and sarees?

Fabric is 5% at any price. Notification 9/2025 puts woven fabrics of silk (5007), wool (5111 to 5113), cotton (5208 to 5212), man-made filament (5407, 5408) and man-made staple fibre (5512 to 5516), and knitted fabric (chapter 60), in Schedule I with no price limit. GST 2.0 also cut man-made fibre from 18% to 5% and man-made yarn from 12% to 5%, which helps the mills more than the shop.

Sarees are where shops most often ask. A saree is normally sold as a length of woven fabric, and in practice it is classified under the fabric headings of its material, so it is 5% whether it costs ₹600 or ₹60,000. No notification or circular names sarees in the apparel entries.

The answer can change when the saree stops being plain fabric:

• A pre-stitched or ready-to-wear saree is arguably a garment under chapter 62, which brings in the ₹2,500 test.
• A saree sold with a stitched blouse at one price raises the question of whether it is one item or two.
• Unstitched dress material sold as a suit set is usually treated as fabric, but a set with any stitched piece may not be.

Is a kurta set one piece or two?

The notification doesn't say, and this is not settled. A kurta with pyjama and dupatta sold at one price can be read two ways:

• One piece. The Customs Tariff treats a matching "suit" or "ensemble" as one article in headings 6203 and 6204, which suggests the set's total price is the value to test.
• Separate pieces. If you price and bill the kurta, pyjama and dupatta as separate lines, each is tested on its own.

The difference matters. A ₹3,600 set billed as one item is at 18%. The same set billed as a ₹2,200 kurta, ₹900 pyjama and ₹500 dupatta is 5% on all three. Splitting a set only to get under the limit, when it is really sold as one, is the kind of thing an officer will question. Decide with your CA how your sets are sold and billed, and stick to it.

What HSN code do you put on a clothing bill?

The HSN code tells the tax department which entry your goods fall under. Notification 78/2020-Central Tax sets how many digits you print:

• Turnover up to ₹5 crore in the previous year: 4 digits, required on bills to registered customers and optional on bills to walk-in customers.
• Above ₹5 crore: 6 digits on every bill.

Common 4-digit headings for a clothing shop:

The HSN code doesn't decide the rate on its own for clothes: 6205 can be 5% or 18% depending on the shirt's price. Print the code and choose the rate from the piece's value. For the rest of what a valid bill needs, see what makes a GST invoice valid.

Does the composition scheme change any of this?

Yes, for what you collect. A shop on the composition scheme under section 10 of the CGST Act can't charge GST to customers at all. It issues a bill of supply and pays tax on its turnover at the rate in Rule 7 of the CGST Rules, which for a trader is 0.5% CGST plus 0.5% SGST. The 5% and 18% split matters to a composition shop only when it buys stock, because that is the GST its suppliers charge it.

Did the 57th GST Council change GST on clothes?

No. The 57th GST Council meeting on 8 Oct 2026 clarified a few goods entries, such as toys and sublimation paper, but changed no rate on clothing, fabric or footwear. The ₹2,500 rule from 22 Sep 2025 stands. Our summary of the 57th Council for small businesses covers what it did change.

How Pocket Journal for Garments fits in

Pocket Journal for Garments is built for a clothing shop's counter. Each style is stocked as size and colour variants, and every piece gets a barcode sticker printed in the shop, with the price on it if you want. At the till you scan with a USB scanner, the laptop camera or a linked phone, add a line discount or a bill discount in rupees or percent, and print the slip on a thermal roll or a quarter of an A4 sheet.

A bill discount is spread across the lines in proportion to their value, so each piece carries its own net price. That is the number the ₹2,500 test looks at.

GST billing in the app is built but not switched on yet, so it charges no GST today. When it is, it tests each piece's price after discount against the ₹2,500 line, as described in how discounts change GST on clothes. Until then, decide each piece's rate as this guide and your CA advise.