GST Council corrects inverted duty structure for MMF textile sector

For the textile sector, the Council has announced correction of long-pending inverted duty structure for the man-made textile sector by reducing GST rate on man-made fibre from 18 per cent to 5 per cent and man-made yarn from 12 per cent to 5 per cent.

The GST rate has been increased from 12 per cent to 18 per cent on all apparel and clothing accessories, footwear, other made up textile articles (other than worn clothing), cotton quilts, and products wholly made of quilted textile material exceeding ₹2,500 per piece. Earlier, these articles were charged at 12 per cent if their value exceeded ₹1,000 per piece. Under the new structure, garments priced between ₹1,000 and ₹2,499 per piece would attract a GST of 5 per cent, instead of the earlier 12 per cent.

GST has not been removed on raw cotton. Explaining the reason, the GST Council said, “Currently, cotton attracts GST on reverse charge basis. This means that agriculturists do not have to pay GST when they supply raw cotton. The reason for taxing cotton in GST is to avoid breakage in input credit chain and the GST paid on cotton is available as input tax credit (ITC) for the textile industry. This will ultimately benefit the consumers.”

The new rates will come into effect from September 22, 2025.

The next-generation GST reforms, as announced by Prime Minister Narendra Modi from the ramparts of Red Fort on 15th August 2025, represent a strategic, principled, and citizen-centric evolution of a landmark tax framework, which will enhance the quality of life of every last citizen.

The reforms have been approved “with a multi-sectoral and multi-thematic focus on improving the lives of all citizens and ensuring ease of doing business for all, including small traders and businessmen,” the Council said.

ALCHEMPro News Desk (RKS)