Khadi yarn is GST-exempt, khadi fabric sold via KVIC outlets gets special treatment, and garments attract 5-18%. Rates, HSN codes, and exemptions explained.
In 2017, the Indian government implemented the Goods and Services Tax (GST) on Khadi for the first time, a notable change given the fabric’s historical significance with the nation’s independence movement. While Khadi yarn remains tax-exempt, various Khadi products and ready-made garments are subject to GST rates ranging from 5% to 18%. This article details the GST implications for Khadi and its associated HSN code.
Understanding Khadi’s GST Taxation Scope
The GST framework for Khadi encompasses various rates depending on the product type and value. Khadi fabric priced below Rs 1,000 is subject to a 5% GST (2.5% SGST + 2.5% CGST). For fabric exceeding Rs 1,000 in selling price, the GST rate increases to 12% (6% SGST + 6% CGST). Notably, Khadi fabrics distributed through the Khadi and Village Industries Commission (KVIC) or its certified outlets, including Khadi Bandars, are exempt from GST. This exemption specifically applies to raw Khadi fabrics, not ready-made garments. Ready-made Khadi garments have their own GST structure: those priced under Rs 1,000 incur a 5% GST (2.5% CGST + 2.5% SGST), while garments priced above Rs 1,000 are taxed at 12%. Additionally, Polyester Khadi, a blend of polyester and Khadi fiber, attracts an 18% GST rate.
Khadi GST Rates and HSN Codes Overview
| Product | HSN Code | GST Rate |
|---|---|---|
| Khadi | 62114921 | 12% |
| Khadi Yarn | – | 0% |
| Khadi fabric sold by KVIC | – | 0% |
Sarees and dhotis are subject to a 5% GST, with the specific rate depending on their primary fiber composition, as detailed in the table below.
| Constituent Fibre | Description | HSN Code | GST Rate |
|---|---|---|---|
| Cotton saree | Of not more than 200 gsm | 5208 | 5% |
| Of more than 200 gsm | 5209 | 5% | |
| Silk saree | Woven silk fabric | 5007 | 5% |
| Artificial filaments | Any gsm | 5407 or 5408 | 5% |
Khadi fabrics procured from KVIC and its authorized retailers are exempt from GST. Conversely, other Khadi cloth and garments are subject to GST rates ranging from 5% to 18%.
Since January 2022, the Goods and Services Tax (GST) on all clothing items, regardless of their price point (above or below Rs 1,000), has been standardized at 12%. Prior to this change, garments retailed for less than Rs 1,000 were taxed at a lower rate of 5%.
FAQs on GST for Khadi
- Is khadi yarn taxed under GST?
No. Khadi yarn is GST-exempt at 0%. - Is khadi fabric exempt from GST?
Raw khadi fabric sold through KVIC, its certified outlets or Khadi Bandars is exempt (0%). This exemption applies to raw fabric, not ready-made garments. - What GST applies to khadi garments?
Ready-made khadi garments priced under Rs 1,000 attract 5% GST, and those above Rs 1,000 attract 12%. - What is the GST rate on polyester khadi?
Polyester khadi, a blend of polyester and khadi fibre, is taxed at 18%. - What is the HSN code for khadi?
Khadi is classified under HSN 62114921 at a 12% GST rate; cotton and silk sarees fall under HSN 5208/5209/50 at 5%.
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