GST on Khadi: HSN Code and GST Rate on Khadi Products

The government of India levied GST on Khadi for the first time in 2017 – it was the first time any tax was levied on the fabric, for it is often associated with the country’s freedom struggle. While khadi yarn does not attract any tax, khadi products and garments will be taxed at 5–18% GST. Continue reading the article to know more about the scope of GST on khadi and its HSN code.

Scope of taxation of Khadi under GST

Following is the scope of taxation of khadi under GST:

GST rate on khadi cloth is 5% — 2.5% SGST and 2.5% CGST — if its selling price is less than Rs 1,000. However, if the selling price is more than Rs 1,000, the GST will be 12% — 6% SGST and 6% CGST. 

However, khadi fabric sold via Khadi and Village Industries Commission (KVIC) and KVIC-certified outlets or certified Khadi Bandars is exempt from the purview of GST. This includes only khadi fabrics and not readymade khadi garments. 

Readymade khadi garments are taxed at 5–12%. If the readymade khadi garments are priced at less than Rs 1,000, they will be taxed at 5% — 2.5% CGST and 2.5% SGST. However, if the selling price is more than Rs 1,000, the GST will be 12%.

Polyester khadi, a fabric that is an amalgamation of polyester and fabric, is taxed at 18%. 

GST Rate and HSN code on Khadi 

FAQs on GST on Khadi Products

How much GST on sarees?

Depending on the constituent fibre, sarees and dhotis attract 5% GST as shown in the following table:

What is the GST on khadi fabrics?

Khadi fabric sold via KVIC and certified outlets are exempt from GST. Khadi cloth and khadi garments, on the other hand, attract GST of 5–18%. 

How much is the GST on clothes?

The GST rate on clothes is 12% whether the price of clothes is more or less than Rs 1,000. This was not the case before 2022, as clothes priced below Rs 1,000 used to attract only 5% GST.