Shopping from Zara, H&M to get costlier: Impact of GST 2.0 on textiles

From Sept 22, clothes and accessories priced above ₹2,500 will face 18% GST, up from 12%, making mid-range brands costlier while GST on lower-priced textiles remain at 5%

If you’re planning a shopping haul at Zara, H&M or other high-street brands, you may want to check the new Goods and Services Tax (GST) rules first. Starting September 22, apparel and accessories priced above ₹2,500 will attract a higher rate making your cart value noticeably steeper.

 

Union Finance Minister Nirmala Sitharaman announced the new GST reforms during the 56th GST Council meeting in New Delhi on Wednesday. The reforms cover multiple sectors, including automobiles, textiles, education, and more.

 

As per the new rules, many textile articles will continue to be taxed at 5 per cent, but only if they are priced at or below a specified limit. Items exceeding that value will now fall under higher GST slabs.

 

 

In the apparel sector, clothing and accessories priced above ₹2,500 will be taxed at 18 per cent, up from the earlier 12 per cent. This change is expected to make shopping at fast-fashion retailers like Zara, H&M and other premium brands more expensive. 

 

The new rate of 18 per cent will be applied to the following items priced above ₹2,500:

• Knitted or crocheted apparel and clothing accessories
• Non-knitted apparel and clothing accessories
• Other made-up textile articles (excluding worn clothing, rags)
• Quilted textile products wholly made of textile material
• Cotton quilts

Meanwhile, affordable garments and textile goods priced below or up to ₹2,500 per piece will continue to be taxed at 5 per cent rate.

What gets cheaper now?

In an effort to provide relief to manufacturers, traders, and consumers, the government has announced a major GST reduction for a wide range of textile goods. Items, including threads, yarns, ropes, cords, and various decorative fabrics will be charged at 5 per cent, much lower from existing 12 per cent.

 

Key items that will now be taxed at 5 per cent include:

• Threads and yarns: Sewing threads of man-made filaments or staple fibres, as well as synthetic and artificial yarns.
• Special fabrics and materials: Wadding (like absorbent cotton wool), felt, nonwovens, rubberised threads, metallised yarn, chenille and loop wale yarn.
• Ropes and cords: Twine, cordage, ropes and cables, except those made of jute or coir.
• Carpets and floor coverings: Knotted, woven, tufted or felt-based carpets, mats, bath mats, cotton rugs and similar handloom products.
• Home and decorative fabrics: Terry towelling, gauze, tulles, nets, lace, handwoven tapestries, braids, trimmings, tassels, zari borders, embroidery, and quilted textiles.
• Coated and technical textiles: Fabrics coated with gum or plastics, tyre cord fabrics, linoleum, wall coverings, rubberised fabrics, painted canvases, textile wicks, hose pipes, conveyor belts, and textiles used in machinery or technical applications.
• Headgear: Textile caps, knitted or crocheted hats, and hats made from lace or other fabrics.