Khadi, an emblem of self-sufficiency and a vital element of India’s cultural heritage holds a cherished spot in the hearts of Indians.
Renowned for their beauty and positive impact on the environment and society, Khadi products often raise questions about GST.
This post explores the exemption status of GST on Khadi, the GST HSN code applicable, and answers frequently asked questions about GST on Khadi.
Do Khadi Goods Have GST Exemption?
Contrary to popular belief, Khadi products are not entirely exempted from GST.
However, they do receive certain benefits under the GST system and through Khadi Board Registration.
Registered entities under the Khadi and Village Industries Commission (KVIC) enjoy a reduced GST rate of 5% on Khadi products.
This implies that Khadi products are subject to a lower GST rate compared to other items.
GST HSN Code for Khadi Products
The GST HSN code for Khadi products is 50.08, which belongs to the category of yarn and fabrics made from natural fibers.
HSN codes are utilized for the classification of goods under GST.
|Khadi Product||HSN Code|
|Khadi fabric, without embroidery||5208|
|Khadi fabric, with embroidery||5810|
|Khadi shawls, stoles, and scarves||6214|
|Khadi blankets and rugs||6301|
|Khadi sarees, dhotis, lungis, angavastrams||5208|
|Khadi towels, handkerchiefs||6302|
For more information and correct GST Return Filing, it is recommended to consult professionals.
GST Registration for Khadi Products in India
Khadi producers and sellers who exclusively sell their products through KVIC outlets are exempt from GST registration.
They are not obligated to register under GST, file GST returns, or pay GST on their sales.
This exemption is a relief for small-scale khadi producers who may lack the resources to comply with GST regulations.
However, if khadi producers or sellers choose to sell their products through other channels like retail stores or online marketplaces, they must register under GST if their annual turnover exceeds the GST threshold limit of Rs. 20 lakhs.
Input Tax Credit for Khadi Products
Khadi products sold through KVIC outlets do not attract GST, hence no input tax credit is available.
However, if khadi products are sold through other channels, sellers can claim input tax credit for the GST paid on their purchases.
Want to know the process to claim Input Tax Credit for Khadi Products?
In conclusion, Khadi sarees are subject to a GST rate of 5%, but if they have embroidery or zari work, a higher GST rate may apply. Khadi fabrics sold by KVIC registered entities have a concessional GST rate of 5%. However, if sold by unregistered entities, the standard GST rate of 12% applies. The GST on clothes in general varies depending on factors such as fabric type and garment value.
Moreover, If you want any other guidance relating to GST Rate on Khadi Products, Please feel free to talk to our business advisors at 8881-069-069.
Download E-Startup Mobile App and Never miss the latest updates narrating to your business.