GST RATE OF TAX FOR READY TO STITCH MATERIALS
(SALWAR SUITS AND CHUDI MATERIALS ETC)
The Goods and Services Tax
Act, 2017 came into force in India with effect from 1.7.2017.
Under Goods and Services Tax Act, 2017 articles of apparel
and clothing accessories, not knitted or crocheted, of sale value exceeding Rs.
1000 per piece will attract GST at 12%
and apparel and clothing accessories, not knitted or crocheted, of sale
value not exceeding Rs. 1000 per piece will attract GST at 5%.
The dealers in readymade garments were collecting GST at 5%
and at 12% for ready to stitch materials i.e. salwar suit materials and chudi
materials (ready to stitch and not ready to wear) at the above rates based on
the value.
The Salwar Suit materials and Chudi/Chudidhar materials
before becoming readymade articles or an apparel, the fabric is cut from
bundles or pieces and sold in that unstitched state. The consumers buy these
sets or pieces and get it stitched to their shape and size.
The Central Government has clarified that the Mere cutting
and
packing of fabrics into pieces of different lengths from bundles or thans,
will not change the nature of
these
goods and such pieces of fabrics would
continue to be classifiable under the respective heading as the fabric and attract the 5% GST rate.
According to the Central
Government Clarification the Salwar Suit materials, Chudi/Chudidhar materials
will attract 5% GST irrespective of its value under the Goods and Services Tax
Act, 2017.
The Central Government
Notification is given below for ready reference.
Circular No.13/13/2017-GST
To,
F. No. 354/129/2017-TRU
Government
of India
Ministry of Finance
Department of Revenue Tax research Unit
****
North Block,
New
Delhi
27th October 2017
The Principal
Chief Commissioners/Chief
Commissioners/ Principal
Commissioners/
Commissioner of Central Tax (All)
/ The Principal Director
Generals/ Director Generals (All)
Madam/Sir,
Subject: Clarification on Unstitched Salwar
Suits - regarding.
Doubts have been
raised regarding the classification of Cut
pieces
of Fabrics
under GST.
2. It has been represented that before becoming readymade articles or an apparel, the
fabric is cut from bundles or thans and sold in that unstitched state. The
consumers buy these sets or pieces and get it
stitched
to their shape and
size.
3. Fabrics
are
classifiable
under chapters
50
to
55
of
the
First Schedule
to
the
Customs Tariff Act, 1975 on the basis of their
constituent materials and attract a uniform
GST rate
of 5% with no refund of the
unutilized input
tax credit.
4. Mere cutting
and
packing of fabrics into pieces of different lengths from bundles or thans,
will not change the nature of
these
goods and such pieces of fabrics would
continue to be classifiable under the respective heading as the fabric and attract the
5% GST rate.
5. It is requested
that
suitable trade
notices
may
be issued to publicize
the
contents of this
circular.
6. Difficulty if any, in the implementation
of the circular should be brought to the notice of
the Board. Hindi version
would follow.
Yours
faithfully,
Rahil Gupta
Technical
Officer
(TRU)
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