GST on Innerwear and Garments: The ₹2,500 Rule

The current rates

Two points that catch people out. First, the rate applies to the whole value, not just the excess — a garment at ₹2,600 is taxed at 18% on ₹2,600, not 5% on the first ₹2,500. Second, the test is the sale value of the individual piece, not the invoice total. A carton of two hundred pieces at ₹90 each is a 5% invoice, however large the total.

What changed in September 2025

The 56th GST Council meeting rationalised the whole rate structure with effect from 22 September 2025. The 12% and 28% slabs were removed, leaving 5% and 18% as the main rates. For garments, two things happened at once:

For everyday innerwear the change is good news and mostly invisible: the concessional band got much wider, so garments that were creeping past ₹1,000 dropped comfortably back into 5%. For premium apparel above ₹2,500 the rate went up by six points.

What counts as "per piece"

This is the question we get asked most, because a lot of innerwear is sold in packs. Our own Reeze panty, for instance, is supplied in twin packs.

The rule is written per piece of apparel. Whether a multi-pack is treated as two pieces or as one saleable unit is exactly the kind of detail that turns on how the item is packed, marked and priced — and it is worth getting a written view from your accountant rather than a rule of thumb from a supplier. What we can do is tell you precisely how a lot is packed and marked, which is the information that determination rests on. Ask us and it goes on the quotation.

Two related traps worth knowing:

• Discounts. The value that matters is the transaction value, so a discount recorded properly on the invoice affects the figure the threshold is tested against.
• Sets. Where garments are supplied as a set rather than as individual pieces, classification and valuation can both work differently. Check before you invoice, not after.

Where innerwear actually falls

In practice, nearly all cotton innerwear sold in India is far below ₹2,500 a piece, so 5% is the working rate for bloomers, panties, vests and children's innerwear across the mass market. The 18% band matters to premium and branded lingerie, not to a shop selling cotton bloomers at two-figure prices.

The classification that sits underneath the rate — 6108 21 00 for cotton briefs and panties, 6111 20 00 for the youngest children's sizes — is covered in full on our HSN codes for innerwear page. Rate follows classification, so get the code right first.

Job work, yarn and fabric

The September 2025 rationalisation reached up the supply chain as well:

• Job work and tailoring services were reduced to 5%. Hosiery job work is billed under SAC 998821, textile manufacturing services.
• Man-made fibres and yarns came down to 5%, which removed a long-standing inversion where inputs were taxed higher than the finished garment.

That inverted duty structure was the single biggest working-capital complaint in the knitwear trade for years — units accumulated input credit they could not use against a 5% output. Correcting it matters more to a Tiruppur manufacturer's cash flow than the headline garment rate does.

One caveat: dyeing and printing services on textiles have historically been carved out from the plain job-work rate. If that is your line of business specifically, confirm the current position rather than reading it off the general job-work number.

What retailers had to change

If you are a shop or wholesaler and you have not revisited this since September 2025, four things are worth checking:

• Rate masters in your billing software. Anything still set to 12% on a garment line is wrong.
• Price lists and MRP labels printed before the change, where the tax component was calculated at the old rate.
• Stock bought at the old rate and sold after it — the rate applicable is decided by the time of supply rules, which is a conversation for your accountant.
• Purchase orders and rate contracts written as "price plus 12% GST". That clause has been wrong for nearly a year.

Common questions

What is the GST rate on underwear in India?

5% where the sale value is up to ₹2,500 per piece, and 18% above that. Almost all cotton innerwear falls in the 5% band.

Is GST on garments below ₹1,000 still 5%?

Yes, but the question is out of date — the concessional band now runs up to ₹2,500 per piece, not ₹1,000. The change took effect on 22 September 2025.

Is the GST rate on garments 12%?

No, not any more. The 12% slab was removed in the September 2025 rationalisation. Garments above the ₹2,500 threshold are now 18%.

Is the rate applied only to the amount above ₹2,500?

No. If a piece crosses the threshold, the higher rate applies to its entire sale value.

What is the GST rate on hosiery job work?

Job work and tailoring services were reduced to 5% in September 2025, billed under SAC 998821. Dyeing and printing on textiles have been treated separately in the past, so confirm those specifically.

Does GST apply per piece or per pack?

The rule is written per piece of apparel. How a multi-pack is treated depends on how it is packed, marked and priced — get a written view from your accountant, and ask your supplier for the exact packing details it rests on.