GST on Shoes: Tax Rates, HSN Code, Calculation and Impact

Have you ever thought about how GST on shoes affects your pockets? Depending on the type, material and cost of the footwear, the GST rates are different. In this blog, we break down every aspect of GST on footwear.

GST on shoes is 12% for prices under Rs. 1,000 and 18% for prices above Rs. 1,000.

GST Rates on Shoes

The GST on footwear in India depends on many factors, such as the type of shoes, the material used, and the price of the shoes. To understand the concept of GST on shoes better, look at the following table:

HSN Codes for Footwear

The government uses an HSN (Harmonised System of Nomenclature) to properly enforce the GST. For footwear, once a product is classified under an HSN, retrieving the latest tax rates and other compliance information is easier. 

Here’s a list of the popular footwear HSN codes and the GST rates applicable to them. Please note that these are the broader HSN codes. There are subcategories to these HSN codes to list all types of footwear depending on their categories.

SAC or Service Accounting Code is a number that categorises services related to footwear. These services can include repairs, alterations, upgrades and maintenance. The SAC for footwear repair is 9987. The GST on footwear repairs is charged under this SAC at 18%.

Types of Footwear and their GST Applicability

Different types of footwear are categorised and taxed differently under GST. Here’s how GST on footwear differs based on the material and purpose:

Calculation of GST on Shoes

Here are the steps you can follow to calculate the GST on shoes:

Step 1: Identify the Price of the Footwear

Depending on the type of footwear, the GST rates are different. Let’s say you purchase casual shoes. Now there can be 2 scenarios:

Scenario 1: The price of the shoes is below Rs. 1,000, let’s assume Rs. 800

Scenario 2: The price of the shoes is below Rs. 1,000, let’s assume Rs. 2,000

Step 2: Determine the GST Rates

Now, let’s check out the applicable rates for each of the above scenarios. Casual shoes fall under HSN 6505. The rate of GST for shoes will be:

Scenario 1:

As the price is below Rs. 1,000 - 12%.

Scenario 2:

As the price is above Rs. 1,000 - 18%.

Step 3: Calculate the GST Amount

Let’s multiply the price of the shoes by the GST rates to calculate the tax amount.

Step 4: Total Cost Calculation

Add the GST amount to the price to find out the total cost.

You can clearly see the benefit of a lower rate of GST on footwear for shoes below the price of Rs. 1,000. Had there been an 18% GST on it, the GST amount would be Rs. 144 (Rs. 800 x 18%). 

Note: The GST on footwear priced below Rs. 1,000 was 5% before 2021. It is in consideration to bring that rate back to make budget footwear more affordable.

GST Impact on the Footwear Industry

There is a great impact of GST on the footwear industry. Pricing, production and marketing strategies are all affected by the GST rates at some level. Here’s how the industry is impacted:

• Pricing: The lower tax rates on budget footwear make it affordable for the masses, while luxury footwear attracts higher GST.
• Production Costs: The production cost of luxury and premium footwear rises due to the higher GST rate of 18%.
• Market Dynamics: Consumers are more inclined to purchase budget footwear as it is cheaper and attracts lower GST. The demand for shoes costing less than Rs.1,000 becomes much higher because of GST on footwear.

How can Footwear Businesses Claim Input Tax Credit (ITC)?

To claim Input Tax Credit on raw materials used in making footwear, your footwear business must be registered under GST. You should always buy from a GST-registered supplier and get the purchase invoice. Such purchased goods is used only for business purposes. File GSTR-3B correctly reporting the ITC values after reconciling with GSTR-2B.

Understanding the impact of GST on footwear is important for both consumers and businesses. Be it pricing or demand for footwear, GST rates on shoes certainly affect them. The diverse classification of shoes under GST makes it easier to find the relevant HSN code and the rates applicable to a certain type of footwear. We can conclude that the structure of GST has made the footwear industry more organised and consumer-friendly.