Embroidered Designer Sarees To Attract 5% GST

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The Central Board of Excise & Customs (CBEC) has clarified that sarees, regardless of whether they are designer, embroidered or value added in other ways, will attract a 5% Goods & Services Tax (GST).

Sarees will be treated as garments or fabric, even after embroidery or other value addition since no new item emerges after any such process, having a distinct name, character or use, the CBEC stated.

Therefore, whether sarees are embroidered or not, they would be taxed at the same rate at which the fabric is taxed, the CPEC explained recently in a set of frequently asked questions (FAQs).

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The board stated that 5% GST is levied on job processes relating to textile yarn other than manmade fibre or filament as well as fabrics.

On dress materials, it clarified that if sale value does not exceed Rs 1,000, then a 5% GST will be levied and in cases where it exceeds Rs 1,000, a 12% GST will be charged.

All categories of fabric attract a 5% rate according to set GST Council rates. Manmade apparel up to Rs 1,000 will attract 5% tax and those above Rs 1,000, will attract 12%.

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The CBEC stated that sales of old dhotis would be treated as “worn clothing” and taxed as apparel based on sale value. Since old cotton dhotis would be below the sale value of Rs 1,000 per piece, it would be taxed at 5%, the board stated, adding that the tax rate will be 5% on new dhotis.

It also clarified that jute shopping and handbags would be taxed at 18% under GST. 

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