India GST on Textiles : Toward a Uniform 12 % Rate
The GST Council of India is planning to harmonise the GST rate across the textile value chain as part of the ongoing tax reforms.
Currently, GST rates on textiles in India range from 5 % to 18 %, depending on the origin of fibres and fabrics (natural or synthetic), as well as the retail price of garments:
| Items | Current GST rates |
|---|---|
| Cotton | 5% |
| Yarn, silk, wool | 5% |
| Synthetic fibres | 18% |
| Garments ≤ 1,000 INR | 5% |
| Garments > 1,000 INR | 12% |
This fragmented taxation system penalises textile industry players by creating an inverted duty structure (cumulated input tax credit), especially since raw materials like synthetic fibres are taxed more heavily than finished products.
Proposal details and timeline
Introducing a uniform 12 % GST rate could simplify the tax regime and enhance sector competitiveness. However, it would simultaneously raise prices for cotton-based products and lower-value garments historically taxed at 5 %.
The harmonisation of the textile GST rate was initially proposed in 2021, but recent reports indicate it will be tabled again for discussion in September 2025. If adopted, this measure may form part of broader GST simplification efforts.
Implications for businesses
Textile businesses and investors should monitor the GST Council’s decisions closely. A move to a uniform 12 % rate could alter pricing strategies, cash flows, and competitiveness across segments
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