GST rate cuts on fashion, accessories, and textiles come into effect

By

Isabelle Crossley

Published
Jul 31, 2018

A new round of goods and services tax (GST) rate cuts that were announced on July 21 have now come into effect covering many products in the fashion, textile, and beauty sectors.

The interim Finance Minister, Piyush Goyal, announced the new round of GST rate cuts during the GST Council meeting on July 21. Around 88 items in total had rate cuts and Finance Ministry officials expect this move to bring down prices.

A number of items in the highest GST bracket, 28 percent, were reduced to 18 percent and these included scent sprays, make up powder puffs and pads, and electronic grooming items such as shavers and hair clippers. After country-wide protests, sanitary napkins have been made GST exempt and this has also been met with a largely positive response.

A number of textiles had rate cuts and Chenille fabric, handloom Dari, and knitted caps/topi with a retail value under Rs 1,000 ($14.6) were all slashed from 12 to 5 percent. Khadi was already GST exempt and the government lowering other textile tax rates is working towards addressing the demands of various textile organisations.

Footwear had tax rates cut from 18 to 5 percent for footwear with a price of under Rs 1,000. However, footwear with a retail price over Rs 1,000 will continue to be charged 18 percent GST.

Handbags including pouches, purses, and jewellery boxes had GST cut from 18 to 12 percent and handmade lace GST was reduced from 12 to 5 percent. Retailers are encouraged to pass on the cuts to the customer by lowering prices but whether or not this will happen for all items remains to be seen.