In reply to a Lok Sabha question, the Ministry of Finance stated that, based on recommendations of the 56th GST Council meeting, the GST structure for apparel and textiles was rationalised by removing the 12% slab and adopting a simplified two-rate structure. GST on articles of apparel and clothing accessories with a sale value exceeding ₹2,500 per piece was increased from 12% to 18%, while the threshold for the concessional 5% rate was raised from ₹1,000 to ₹2,500 per piece. Certain handmade and hand-embroidered textile items continue to attract 5% GST, with threshold limits removed in specific cases. These changes, implemented from 22 September 2025, are aimed at improving affordability, stimulating consumption, and sustaining employment in the labour-intensive garment sector. Following the rate rationalisation, gross GST collections for October 2025 stood at ₹1,95,936 crore, a 4.6% year-on-year increase. Additional support includes reduction of GST on man-made fibres and yarns to 5% and continued assistance through multiple textile-sector schemes and export remission programs.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO. 2509
TO BE ANSWERED ON MONDAY, DECEMBER 15, 2025/AGRAHAYANA 24, 1947 (SAKA)
CHANGE IN GST RATE ON READYMADE GARMENTS
2509. SHRI GURMEET SINGH MEET HAYER:
Will the Minister of FINANCE be pleased to state:
a. whether the Government has made any changes in the GST rate on readymade garments and textile accessories, resulting in increasing tax from 12 per cent to 18 per cent on items priced above Rs. 2,500 per piece, if so, the rationale for selecting the 2,500 threshold;
b. whether any assessment was made of its likely impact on affordability for middle-class consumers affordability, organized retail and labour-intensive garment units, if so, the details 80 thereof;
c. whether the Government has any estimates of the additional revenue generated by this rate increase and the manner in which it is expected to be offset by a potential slowdown in demand or production in the affected segments, if so, the details thereof; and
d. whether any support measures for lower GST slabs for small textile/handloom units, incentive schemes or demand boosting have been proposed to offset adverse impact of the said GST change on traditional textile workers, artisans, and domestic manufacturers and if so, the details thereof?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a), (b) and (c) As per Article 279-A GST Council, in its 56th Meeting of GST Council, while recommending a simplified two slab structure by removal of existing 12% slab, had recommended to increase GST rate from 12% to 18% on articles of apparel and clothing accessories and other made-up textile articles of sale value exceeding Rs 2500 per piece. Further, the Council recommended to increase the threshold value for concessional rate of GST of 5% on articles of apparel and clothing accessories from Rs 1000 per piece to Rs 2500 per piece. Moreover, the GST rate on handmade/ hand embroidered shawls has been retained at 5% and the threshold value limit for the same has been removed. Hand embroidered articles such as embroidery in strips/ motifs, handmade lace etc continue to attract 5% GST. This is expected to improve affordability and stimulate consumption demand which, given the labour-intensive nature of garmenting, will sustain and expand employment. The changes in rates recommended by the GST Council have been implemented by the Central Government with effect from 22nd September 2025. Following the rate rationalization in September, the gross Goods and Services Tax (GST) revenue collected for October 2025 is ₹1,95,936 crores, registering a 4.6% increase compared last year.
(d) Based on the recommendations of the GST Council the GST rate has been reduced to 5% on manmade fibres and yarns from 18% and 12% respectively. This is expected to increase the competitiveness of MSME textile manufacturers and exporters.
This rate reduction is further supplemented by existing major schemes/initiatives of the Government including PM Mega Integrated Textile Regions and Apparel (PM MITRA) Parks Scheme to create a modern, integrated, world class textile infrastructure; Production Linked Incentive (PLI) Scheme focusing on MMF Fabric, MMF Apparel and Technical Textiles to boost large scale manufacturing and enhancing competitiveness; National Technical Textiles Mission focusing on Research Innovation & Development, Promotion and Market Development; SAMARTH – Scheme for Capacity Building in Textile Sector with the objective providing demand driven, placement oriented, skilling program; Silk Samagra-2 for comprehensive development of sericulture value chain and National Handloom Development Program for end to end support for handloom sector. Ministry of Textiles is also implementing the National Handicrafts Development Programme and Comprehensive Handicrafts Cluster Development Scheme for promotion of handicrafts.
Further, the Government is also administering the remission schemes of Rebate of State and Central Taxes and Levies (RoSCTL) for Apparel/Garments and Made-ups and the Remissions of Duties and Taxes on Exported Products (RoDTEP) Scheme for other textiles products.
