GST rate on apparel, footwear to increase from 5% to 12% from January 1

New Delhi: With effect from January 2022, the government has raised the goods and services tax (GST) on finished goods such as garments, textiles, and footwear from 5% to 12%.

The Central Board of Indirect Taxes and Customs (CBIC) announced this on November 18.

From January 2022, the GST rate on fabrics will be raised to 12 percent from 5 percent, and the GST rate on garments of any value has been raised to 12 percent, compared to the previous rate of 5 percent on items priced up to Rs 1,000.

Textiles (including woven fabrics, synthetic yarn, pile fabrics, blankets, tents, accessories such as tablecloths or serviettes, rugs and tapestries) have also seen their rates raised from 5% to 12%, while footwear of any value has seen its rate raised from 5% (up to Rs 1,000/pair) to 12%.

According to sources, the Clothing Manufacturers Association of India (CMAI) expressed "great displeasure" with the government's decision to raise GST rates on clothes on November 19.

This cost increase will have a significant impact because the industry is facing inflationary headwinds, with raw material prices, particularly yarn, packing material, and freight, on the rise.

According to reports, the GST Council recommended the increase.