In short: Garments sold at an MRP of up to Rs 1,000 attract 5% GST; above Rs 1,000 the rate is 12%. As a registered retailer you charge GST to customers, claim input tax credit (ITC) on what you paid your supplier, and net the two when you file. This guide walks through the mechanics.

GST on textiles is one of the most asked-about topics among garment retailers, and also one of the most confused. The good news: once you understand three things — the rate slabs, the threshold, and input tax credit — most of the confusion disappears. This article explains the general framework as we understand it; it is not tax advice. Always confirm current rates with your CA.

1. What are the GST rates on garments?

Ready-made garments and made-up textile articles broadly fall into two slabs:

  • 5% GST on articles sold up to Rs 1,000 per piece (MRP).
  • 12% GST on articles sold above Rs 1,000 per piece (MRP).

Fabric (un-stitched, sold by the metre) is taxed differently — typically 5% — which is why the rate can change between when you buy fabric and when you sell a stitched garment.

2. How does the Rs 1,000 GST threshold work?

The threshold is based on the MRP printed on the item, not on what you actually sell it for. If a kurti's MRP is Rs 1,200, it's a 12% item even if you give a festival discount and sell it at Rs 999. This is the most common slip retailers make.

Rule of thumb: set MRP thoughtfully. A Rs 999 MRP garment stays in the 5% slab; a Rs 1,001 MRP garment jumps to 12%. Many brands price just under or clearly over the line — not awkwardly on top of it.

What changes when you cross the line

It's not just more tax. At 12%, the absolute tax amount is larger, your working-capital requirement rises, and your customers feel the price jump. For value ethnic wear, staying under the threshold is often a deliberate pricing decision.

3. What is input tax credit (ITC) and how do I claim it?

When you buy stock from a GST-registered wholesaler (like BrownBarry), the invoice they give you contains tax you've already paid. This is your input tax. When you sell to your customer and collect GST, that's your output tax. You file and pay only the difference: output minus input.

This is why buying from a supplier who gives you a proper GST invoice is so important — without it, you cannot claim ITC, and you end up paying tax twice on the same goods.

  • Always insist on a tax invoice from your supplier (not just a delivery challan or WhatsApp note).
  • Match the supplier GSTIN on the invoice against what shows up in your GSTR-2B before you claim credit.
  • Reconcile regularly — claiming ITC on an invoice your supplier never uploaded gets reversed later, with interest.

4. What should a garment retail GST invoice contain?

  • Your business name, address, and GSTIN.
  • A unique, sequential invoice number and date.
  • Customer name and address (GSTIN if they're a business buying B2B).
  • Item description, HSN code (usually 6109/6104/6110 range for knitted garments — confirm with your CA), quantity.
  • MRP (mandatory for retail garments under the Legal Metrology rules) and the selling price.
  • Taxable value, GST rate, and tax split (CGST + SGST, or IGST).
  • Total amount, rounded off, and the word "Tax Invoice".

5. What common GST billing mistakes should retailers avoid?

  • Charging 5% on a garment whose printed MRP is above Rs 1,000.
  • Claiming ITC without a matching supplier invoice in GSTR-2B.
  • Issuing a "bill" without your own GSTIN once you're registered.
  • Mixing up CGST/SGST (intra-state) with IGST (inter-state) when buying from another state.

The bottom line

Get the slab right, price with the Rs 1,000 line in mind, claim ITC only on invoices that reconcile, and keep your tax invoice format complete. Do these four things and GST billing stops being a source of stress. To see how BrownBarry supplies GST-compliant invoices with every order, read how we work.

How BrownBarry does this: every dispatch carries a proper GST tax invoice with our GSTIN, HSN codes, and the correct rate for the slab, so you can claim ITC without reconciliation headaches. See our registration details or ask for a sample invoice.