Sector Overview
The 56th GST Council meeting has brought major changes to the textile sector GST rates. A wide range of textile entries have been rationalised to the 5% GST slab, while certain higher-value apparel and quilts now fall under the 18% slab.
The key objectives behind these changes are:
- To reduce input costs for spinning, weaving, and processing units.
- To support MSME clusters engaged in textile production.
- To simplify the classification of yarns, technical textiles, and floor coverings.
- To ensure affordability of budget apparel and quilts (value up to ₹2,500) by keeping them at 5%.
This blog summarises the complete list of changes, impact analysis, and the steps businesses in the textile value chain need to take.
Major GST Rate Changes
(A) 12% → 5%
Large categories of yarns, fabrics, nonwovens, carpets, terry towels, laces, tapestries, technical textiles, and textile articles have shifted from 12% to 5%.
👉 This move reduces input cost pressure and makes domestic as well as export pricing more competitive.
Some key examples include:
- Sewing thread of man-made filaments and fibres
- Synthetic and artificial filament yarns
- Nonwovens, felt, wadding
- Carpets, floor coverings, terry fabrics
- Embroidery, lace, labels, tassels, trimmings
- Technical textiles like tyre cord fabrics, conveyor belts, coated/laminated fabrics
- Textile caps, hats, and articles of quilted textile ≤ ₹2,500 per piece
(All items remain eligible for ITC.)
(B) Clarification on Value Condition (Rate stays at 5%)
Certain textile goods such as budget apparel, made-ups, cotton quilts, and accessories priced ≤ ₹2,500 continue to attract 5% GST, but the value-based condition has been clarified to avoid disputes.
(C) 18% → 5%
A few goods that earlier attracted 18% GST now fall to 5%, further helping the raw material supply chain.
Examples:
- Synthetic or artificial filament tow
- Staple fibres and waste of man-made fibres
(D) 12% → 18%
On the other side, premium apparel and quilts priced above ₹2,500 per piece now fall under 18% GST.
👉 This change mainly impacts branded and premium categories where MRPs will need re-alignment.
(12% → 5%)
| Chapter / HSN | Description of Goods | From | To | ITC |
| 5401 | Sewing thread of man-made filaments, whether or not put up for retail sale | 12% | 5% | ITC available |
| 5402, 5403, 5404, 5405, 5406 | Synthetic or artificial filament yarns | 12% | 5% | ITC available |
| 5508 | Sewing thread of man-made staple fibres | 12% | 5% | ITC available |
| 5509, 5510, 5511 | Yarn of man-made staple fibres | 12% | 5% | ITC available |
| 5601 | Wadding of textile materials and articles thereof; such as absorbent cotton wool (except cigarette filter rods) | 12% | 5% | ITC available |
| 5602 | Felt, whether or not impregnated, coated, covered or laminated | 12% | 5% | ITC available |
| 5603 | Nonwovens, whether or not impregnated, coated, covered or laminated | 12% | 5% | ITC available |
| 5604 | Rubber thread and cord, textile covered; textile yarn and strip of heading 5404/5405 impregnated, coated, covered or sheathed with rubber or plastics | 12% | 5% | ITC available |
| 5605 | Metallised yarn (other than real zari thread and imitation zari thread) | 12% | 5% | ITC available |
| 5606 | Gimped yarn; chenille yarn; loop wale-yarn | 12% | 5% | ITC available |
| 5607 | Twine, cordage, ropes and cables (other than jute twine, coir cordage or ropes) | 12% | 5% | ITC available |
| 5609 | Articles of yarn/strip of 5404/5405, twine, cordage, rope or cables, not elsewhere specified | 12% | 5% | ITC available |
| 5701 | Carpets and other textile floor coverings, knotted, whether or not made up | 12% | 5% | ITC available |
| 5702 | Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up | 12% | 5% | ITC available |
| 5703 | Carpets and other textile floor coverings (including turf), tufted, whether or not made up | 12% | 5% | ITC available |
| 5704 | Carpets and other textile floor coverings, of felt, not tufted or flocked | 12% | 5% | ITC available |
| 5705 | Other carpets & floor coverings (e.g., mats/mattings including bath mats of handloom; cotton rugs of handloom) | 12% | 5% | ITC available |
| 5802 | Terry towelling and similar woven terry fabrics; tufted textile fabrics (other than 5703) | 12% | 5% | ITC available |
| 5803 | Gauze (other than narrow fabrics of 5806) | 12% | 5% | ITC available |
| 5804 | Tulles and other net fabrics; lace (other than 6002–6006) | 12% | 5% | ITC available |
| 5805 | Hand‑woven tapestries; needle‑worked tapestries | 12% | 5% | ITC available |
| 5807 | Labels, badges & similar textile articles, in piece/strips/cut to size, not embroidered | 12% | 5% | ITC available |
| 5808 | Braids; ornamental trimmings without embroidery; tassels/pompons etc. (other than saree fall) | 12% | 5% | ITC available |
| 5809 | Woven fabrics of metal thread and metallised yarn (e.g., zari borders) | 12% | 5% | ITC available |
| 5810 | Embroidery in the piece/strips/motifs; embroidered badges etc. | 12% | 5% | ITC available |
| 5811 | Quilted textile products in the piece (other than 5810) | 12% | 5% | ITC available |
| 5901 | Textile fabrics coated with gum/amylaceous substances; tracing cloth; prepared painting canvas; buckram & similar stiffened fabrics | 12% | 5% | ITC available |
| 5902 | Tyre cord fabric (high tenacity yarn of nylon/polyamides/polyesters/viscose rayon) | 12% | 5% | ITC available |
| 5903 | Textile fabrics impregnated, coated, covered or laminated with plastics (other than 5902) | 12% | 5% | ITC available |
| 5904 | Linoleum; floor coverings on textile backing | 12% | 5% | ITC available |
| 5905 | Textile wall coverings | 12% | 5% | ITC available |
| 5906 | Rubberised textile fabrics (other than 5902) | 12% | 5% | ITC available |
| 5907 | Other impregnated/coated/covered textile fabrics; painted canvas for scenery/backcloths | 12% | 5% | ITC available |
| 5908 | Textile wicks; incandescent gas mantles and tubular knitted gas mantle fabric | 12% | 5% | ITC available |
| 5909 | Textile hose piping & similar textile tubing | 12% | 5% | ITC available |
| 5910 | Transmission or conveyor belts of textile material (impregnated/coated/covered/laminated) | 12% | 5% | ITC available |
| 5911 | Technical textile products & articles (Note 7) – card clothing, bolting cloth, paper‑maker’s felt, gaskets/washers/discs of textile, etc. | 12% | 5% | ITC available |
| 6501 | Textile caps | 12% | 5% | ITC available |
| 6505 | Hats (knitted/crocheted) or made up from lace or other textile fabrics | 12% | 5% | ITC available |
| 9404 | Products wholly made of quilted textile material not exceeding ₹2,500 per piece | 12% | 5% | ITC available |
Change in value condition (rate remains 5%)
| Chapter / HSN | Description of Goods | From | To | ITC |
| 61 | Apparel & clothing accessories, knitted/crocheted – sale value ≤ ₹2,500 per piece | 5% | 5% (value condition clarified) | ITC available |
| 62 | Apparel & clothing accessories, not knitted/crocheted – sale value ≤ ₹2,500 per piece | 5% | 5% (value condition clarified) | ITC available |
| 63 (excl. 63053200, 63053300, 6309) | Other made‑up textile articles, sets – sale value ≤ ₹2,500 per piece | 5% | 5% (value condition clarified) | ITC available |
| 9404 | Cotton quilts – sale value ≤ ₹2,500 per piece | 5% | 5% (value condition clarified) | ITC available |
(18% → 5%)
| Chapter / HSN | Description of Goods | From | To | ITC |
| 5402, 5404, 5406 | All goods | 18% | 5% | ITC available |
| 5403, 5405, 5406 | All goods | 18% | 5% | ITC available |
| 5501, 5502 | Synthetic or artificial filament tow | 18% | 5% | ITC available |
| 5503, 5504, 5506, 5507 | Synthetic or artificial staple fibres | 18% | 5% | ITC available |
| 5505 | Waste of man‑made fibres | 18% | 5% | ITC available |
(12% → 18%)
| Chapter / HSN | Description of Goods | From | To | ITC |
| 61 | Apparel & clothing accessories, knitted/crocheted – sale value > ₹2,500 per piece | 12% | 18% | With ITC |
| 62 | Apparel & clothing accessories, not knitted/crocheted – sale value > ₹2,500 per piece | 12% | 18% | With ITC |
| 63 [other than 6309] | Other made‑up textile articles, sets – sale value > ₹2,500 per piece (excl. worn clothing/rags) | 12% | 18% | With ITC |
| 9404 | Cotton quilts – sale value > ₹2,500 per piece | 12% | 18% | With ITC |
| 9404 | Products wholly made of quilted textile material – value > ₹2,500 per piece | 12% | 18% | With ITC |
Impact Analysis
- Spinning, Weaving & Knitting Units
- Input costs reduce significantly due to 5% on yarns, nonwovens, and technical textiles.
- Improves capacity utilisation for MSME clusters.
- Home Textiles & Floor Coverings
- Carpets, terry towels, mats, and quilts (≤ ₹2,500) now at 5%.
- Helps improve export competitiveness and domestic affordability.
- Premium Apparel & Quilts (> ₹2,500)
- GST raised to 18% may require MRP restructuring.
- Higher impact on premium brands and urban retail markets.
- Working Capital & Refunds
- Possible inverted duty structure where dyes, chemicals, and services remain at 18%.
- Businesses must ensure strong refund documentation to claim ITC smoothly.
- Compliance & Systems
- Update ERP, contracts, and purchase orders with revised HSN mapping.
- Monitor value conditions around ₹2,500 to avoid wrong GST application.
- Prepare internal SOPs for HS classification to prevent misclassification errors.
Key Takeaways for Businesses
- Revise rate masters and price lists in accounting and billing systems.
- Carefully review SKUs priced near ₹2,500 to avoid falling into higher slabs by mistake.
- File inverted duty refunds wherever applicable to manage working capital.
- Update export quotations to reflect reduced GST on inputs.
- Train commercial and plant teams with updated HSN-wise SOPs for smooth compliance.
Conclusion
The 56th GST Council’s textile sector reforms are a big boost to the textile manufacturing backbone, especially for yarns, nonwovens, technical textiles, and floor coverings. While premium apparel faces a higher rate, MSME units and exporters are expected to benefit from lower input costs and better competitiveness.
Businesses should act quickly to realign pricing, update compliance systems, and strengthen refund processes to fully leverage these changes.
LinkedIn Link : RMPS Profile
This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
Published on: September 13, 2025