Clarification on Unstitched Salwar Suits - GST Circular

The following

GST Circular No.13/13/2017-GST was issued on 27/10/2017 to clarify the 1 on unstitched Salwar Suits. Through this GST Circular, the GST Department has clarified that the GST rate for unstitched salwar suits would be 5%. Also, cutting and packing of fabrics into pieces of different lengths will not change the nature of goods and the fabric would continue to attract 5% GST rate.

Circular No.13/13/2017-GST

F. No. 354/129/2017-TRU Government of India Ministry of Finance Department of Revenue Tax research Unit ****

North Block, New Delhi 27th October 2017

To, The Principal Chief Commissioners/Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All) Madam/Sir, Subject: Clarification on Unstitched Salwar Suits - regarding. After the release of the classification, many individuals raised clarifications regarding the classification of Cut pieces of Fabrics under GST.

The individuals stated that before becoming ready-made articles or apparel, the fabric is cut from bundles or thans and sold in that unstitched state. The consumers buy these sets or pieces and get it stitched to their shape and size.
Fabrics are classifiable under chapters 50 to 55 of the First Schedule to the Customs Tariff Act, 1975 on the basis of their constituent materials and attract a uniform GST rate of 5% with no refund of the unutilized input tax credit.
Mere cutting and packing of fabrics into pieces of different lengths from bundles or thans, will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the respective heading as the fabric and attract the 5% GST rate.
Requested that suitable trade notices can issue publicize the contents of this circular.
Difficulty if any, in the implementation of the circular should be brought to the notice of the Board. Hindi version would follow.

Yours faithfully,

Rahil Gupta

Technical Officer (TRU)

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Frequently Asked Questions

Common questions about GST Clarification on Unstitched Salwar Suits.

The GST rate applicable on unstitched salwar suits is 5%. The GST Circular No.13/13/2017-GST clarifies that cutting and packing of fabrics into pieces of different lengths will not change the nature of the fabric, and it will continue to attract a 5% GST rate.

No, cut pieces of fabric are not classified differently under GST. The circular clarifies that mere cutting and packing of fabrics into pieces of different lengths from bundles or thans will not change the nature of these goods, and they will continue to be classifiable under the respective heading as the fabric.

The circular does not address the GST rate for stitched garments made from the fabric. It only clarifies the rate for unstitched fabrics and cut pieces of fabric. The GST rate may change once the fabric is stitched into a garment, but the circular does not provide information on that.

The circular does not explicitly state the rationale behind the 5% GST rate for unstitched salwar suits. However, it mentions that fabrics are classifiable under chapters 50 to 55 of the Customs Tariff Act, 1975, and attract a uniform 5% GST rate with no refund of the unutilized input tax credit.

The circular does not specify if the 5% GST rate is applicable to all types of fabrics. It states that fabrics are classifiable under chapters 50 to 55 of the Customs Tariff Act, 1975, and attract a uniform 5% GST rate, but it does not provide details on the types of fabrics covered under these chapters.

No, the circular mentions that fabrics attract a uniform 5% GST rate with no refund of the unutilized input tax credit. This implies that retailers or traders cannot claim input tax credit on the GST paid for unstitched salwar suits or fabrics.

No, the GST Circular No.13/13/2017-GST specifically addresses the clarification on the GST rate applicable to unstitched salwar suits and the classification of cut pieces of fabric. It does not cover any other aspects related to the taxation of fabrics or garments.

The GST circular clarifies that unstitched salwar suits will continue to attract a 5% GST rate, providing clarity to consumers regarding the tax implications of purchasing these items. This transparency in taxation can help consumers make informed decisions when buying unstitched salwar suits.

The purpose of issuing the GST Circular No.13/13/2017-GST was to provide clarification on the classification and GST rate applicable to unstitched salwar suits and cut pieces of fabric. The circular aimed to address the queries raised by individuals regarding the classification of cut pieces of fabric under GST.

Yes, the GST circular is issued by the Ministry of Finance, Department of Revenue, and is binding on all stakeholders involved in the sale and purchase of unstitched salwar suits, including manufacturers, traders, retailers, and consumers. Suitable trade notices are advised to be issued to publicize the contents of the circular.