GST Rate applicability on Rakhi

Raksha Bandhan is a popular festival celebrated across the country. Rakhi, the sacred thread that women tie on the wrist of their brothers on the day of Raksha Bandhan in belief that they will protect them from every wrong coming to them. The festival is also called as Rakhi Poornima, Nariyal Poornima and Kajari Poornima in different states and is celebrated differently.


It holds immense importance in Hinduism, no lesser than any other festival, as it is dedicated to the love of a sister and her brother. The name of the festival, Raksha Bandhan is made up of two words, Raksha (Protection) and Bandhan (Relation). On this day, a sister ties ‘Rakhi’ around her brother’s wrist while the brother undertakes an oath to protect his sister until death. He vows to stand by his sister through thick and thin. Sisters tying the sacred thread around the wrists of brothers are a symbol of attachment, meant to strengthen their bond of love.

A number of myths say the festival of Raksha Bandhan started when, in old times, girls & ladies from general public use to tie ‘rakhi’ to the soldiers & king’s , symbolizing brotherhood. But now, the tradition has altered completely since, in the present era, sisters tie a Raksha Sutra around their brother’s wrists. Though symbolically in present era also girls tie Rakhi’s to Soldiers of Indian Army, Minister’s & even President’s & Prime Minister’s.

According to the Hindu calendar, Raksha Bandhan is celebrated on the full moon of the Savan month. The significance of this festival is undeniable as siblings come close on this very day. Apart from getting his wrist tied with a Rakhi, the brother owes a gift to his sister. Expensive or inexpensive, the gift is cherished by all sisters.This festival helps siblings realize the importance of growing up together.

rakhi rakshabandhan india tradition festival

1. Issues with the applicability of GST on RAKHI:-

In earlier regime of Indirect Taxes, Rakhis were called Raksha Sutra or Kalava (like sacred Hindu threads Moli) and its HSN code or local VAT Code was given accordingly. After GST, shopkeepers were clueless about the code that should be on rachis.

Traders and manufacturers were not issuing bills with GST, there was confusion about rate applicability and if gst is applicable or not. During IDT regime upto 30.06.2017, there used to be no tax on rakhis as almost of the states had exempted the same. After GST there was no clarification on which tax slab it falls in. Though the festivity and goods tax slab is 28 per cent, but not clear if Rakhi falls under same.

2. Clarification after GST applicability on 01/07/2017:-

The Central Board of Excise and Customs (CBEC) on through FAQ’s on classification clarified that Rakhi, in form of kalava or raksha sutra will attract NIL GST. Any other rakhi would be classified as per its constituent material and attract GST accordingly.

Questions as answered in FAQ’s on classification:

2.1.Q . What is the GST rate on Rakhi ?

Ans.(1) Puja samagri, including kalava (raksha sutra) attracts Nil GST.

(2) Rakhi, which is in form of kalava (raksha sutra ) will thus attract Nil GST.

(3) Any other rakhi would be classified as per its constituent materials and attract GST accordingly.

3. West Bengal AAR decision on Rate applicability on Rakhi

West Bengal AAR in case of MD Mohta ( 08/WBAAR/2018-19 dated 05.07.2018) clarified that exemption under Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 is not applicable and thus full rate as per classification would be payable as defined in Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017.

It stated that Rakhi has to be classified as per its constituent material in accordance with Rule 3(c) of Rules for Interpretation of the Customs Tariff Act, 1975.

It further stated that “Rakhi” is not purely puja samagri as it is not an essential and integral part of any Puja or Religious Ceremony to pay obeisance to any Hindu deity, and therefore it cannot attract NIL rate of duty or it cannot be considered to be exempt.

In current scenario “Rakhi” which are being manufactured are not always of Cotton thread i.e. Kalava instead there are Decorative “Rakhi”, Designer “Rakhi”, & Fancy “Rakhi”.

With reference to Raw material also, it is not restricted to red & yellow cotton string (i.e. Kalava) but it also includes other elements such as Zari, Nylon and Silk Threads along with Glass Beads, Plastic Beads, Coloured Stones, Metal Pendants and Rudraksha.

The main focus of the GST Act is to tap in all the points of supply and the characteristic which defines an item at the point of supply is of paramount importance.

In the case of “Rakhi”, the item is supplied by the Applicant, as Decorative/Designer/Fancy/Kids “Rakhi” and customers are being motivated to buy the “Rakhi”s due to the specific characteristic which makes the “Rakhi” Decorative/Designer/Fancy/Kid’s and not merely to put round the wrist.

The resultant products are identifiable as new items, independent in manner and form of its constituent materials, and cannot be stated to be a mere assemblage of its constituent materials.

Due to this AAR decision if Fancy Rakhi’s constituent materials are glass beads, stone, cotton thread and plastic beads which fall under Chapter 70, Chapter 70/71 (depending on the nature of the stone), Chapter 52, Chapter 39, respectively. Assuming that there are no other constituent materials undeclared in the literature submitted by them, under Rule 3(c), this “Rakhi” will be classifiable under Chapter 70/71 and will attract GST accordingly.

Thus this decision of West Bengal could have opened a pandora box of litigations on applicability of GST Rate on Rakhi’s. Department & Assesses views would have been different and this there was a requirement of clarification from Government which they obliged. GST Council took up this matter and clarified issues vide issuing relevant notification.

4. Notification No. 19/2018- Central Tax (Rate)  Dated 26-07-2018

Government inserted Serial No. 152 in Exemption Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 as follows:

Rakhi (other than those made of goods falling under Chapter 71)

Implication of this notification is that Rakhi’s falling under all chapters except Chapter 71 are exempt.

What items falls under Chapter 71 of Customs Tariff Act

This chapter intends to tax all goods which contains Natural or cultured pearls, precious or semi- precious stones, precious  metals, metals  clad with precious  metals, and articles thereof; imitation jewellery etc.

What does Precious metal mean?

Precious metal means items made of silver, gold and platinum.

The expression Platinum means platinum, iridium, osmium, palladium, rhodium and ruthenium.


After considering all aspects and discussion as mentioned above we could safely conclude as follows:

  • Rakhi in form of Kalava attracts NIL rate of Duty.
  • Rakhi made of precious metals as covered under Chapter 71 would be chargeable to GST as per applicable rates in Chapter 71
  • Rakhi made of non-precious stones/metals are fancy Rakhi would also be exempt from GST as they are not covered in Chapter 71.


This article is for information purposes. It should not be considered as Legal Advice or Opinion. Please contact your legal advisor before taking any action based on this article. Author is not responsible for any sort of loss due to any action or non-action based on this article.

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Location: Delhi, New Delhi, IN
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  1. Subhash Dahuja Advocate says:

    The deccision of AAR west Bengal does not seem to be based on sound principles of Law.Rakhi is known and used only as Rakhi in trade parlance and it does seem to have any other function known.Keeping in view the specific exemption in notification, the benefit of doubt will squarely passed to tax payer and not to the Revenue.Moreover exlusion factor has been clearly laid down as well.

  2. subhash Dahuja,Advocate says:

    Conclusion is correct.Rakhi is exempted vide s.No 152 notification No 2/2017.Exception to chapter 71 ie of rakhis made of gold ,silver or precious metals etc.
    Article is informative.

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