GST on Blended Yarn: Cotton Rich Yarns To Attract 5% GST, Consumption To Grow

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Spun yarns are finished product of the short staple fiber (cotton, polyester staple fiber, viscose staple fiber etc.) spinning sector of the Indian textile industry. The Indian textile industry is known as spinning heavy due to its large size compared to downstream sectors like weaving, knitting, dyeing, printing & processing and garmenting. The GST rate for man-made and synthetic fibers has been fixed at 18% while other fibers are covered under 0 to 5% rate of GST. Now, spinning industry mixes various fibers (say polyester with cotton or viscose with cotton or polyester with wool etc. ) at a specified ratio to get various blends of yarns and consumed by fabric producers. Since the ratio of mixing of fibers are different, industry is in uncertainty on the applicable rate of GST on blended yarns.

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The applicable GST rate on blended yarns where two types of fibers of different GST rate are being mixed (say cotton and polyester fiber), would be equal to the GST rate of the major fiber component. For example, say if cotton/polyester blended yarn where cotton is 65% and polyester is 35%, the applicable GST rate on the yarn would be 5%. If the yarn blend is 65% polyester and 35% cotton, then the applicable GST rate would be 18%. Some more examples are given below for better understanding:

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GST on Blended Yarn

Description                                             HS code               GST Rate

100% VSF/Modal                                        551001                  18%

Cotton /Modal (48/52 blend)                       551003                  18%

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Cotton /Viscose (52/48 blend)                    520601                  5%

Cotton /Polyester (65/35 blend)                  520601                  5%

Viscose/Linen (80/20 blend)                       551098                 18%

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