What is the GST rate on clothes now?
| Sale value of one piece, before GST | GST rate | Before 22 Sept 2025 |
|---|---|---|
| Up to ₹1,000 | 5% | 5% |
| ₹1,000.01 to ₹2,500 | 5% | 12% |
| Above ₹2,500 | 18% | 12% |
The change came from the 56th GST Council meeting on 3 Sept 2025, which replaced the four main rates with two (5% and 18%) and a 40% rate for a short list of luxury and sin goods. It took effect on 22 Sept 2025 through Notification 9/2025-Central Tax (Rate).
The rule covers knitted and woven apparel and clothing accessories (HSN chapters 61 and 62) and made-up textile articles such as bedsheets and curtains (chapter 63). Footwear follows the same ₹2,500 line, per pair.
Is the ₹2,500 limit per piece or per order?
Per piece. An order of three shirts at ₹2,000 each is ₹6,000, but each shirt is ₹2,000, so all three are taxed at 5%. One jacket at ₹3,000 is taxed at 18% even if it is the only item in a small order.
Is ₹2,500 before or after GST?
Before. The notification speaks of "sale value", which is the taxable value: the price without GST. A shirt with a taxable value of exactly ₹2,500 is in the 5% band, so the customer pays ₹2,500 + ₹125 = ₹2,625.
Does a discount change the rate?
Yes, when the discount is shown on the invoice. GST is charged on the transaction value after a discount given at the time of sale (section 15 of the CGST Act), and the rate follows that value. A kurta listed at ₹2,800 and sold at ₹2,400 after a coupon is a ₹2,400 piece, taxed at 5%.
A discount given later, through a credit note after the sale, does not change the rate that applied when the invoice was issued.
What if my Shopify prices include GST?
Most Indian stores show prices with GST included, so the ₹2,500 test has to be applied to the price with the tax taken out. This creates three zones:
| Price shown, GST included | Taxable value at 5% | Rate |
|---|---|---|
| Up to ₹2,625 | Up to ₹2,500 | 5% |
| ₹2,625.01 to ₹2,950 | Above ₹2,500 | See below |
| Above ₹2,950 | Above ₹2,500 at either rate | 18% |
The middle zone has no clean answer. At 5% the taxable value comes out above ₹2,500, so 5% cannot apply; at 18% it comes out below ₹2,500, so 18% should not apply either. Charging 18% in this zone is the safe reading, because paying more tax than due is not a default and paying less is. Most brands avoid the zone: they price at ₹2,625 or below, or above ₹2,950.
Why the line matters more than it looks
Crossing ₹2,500 by one rupee costs the customer far more than a rupee:
| Taxable value | GST | Customer pays |
|---|---|---|
| ₹2,500 | ₹125 (5%) | ₹2,625 |
| ₹2,501 | ₹450.18 (18%) | ₹2,951.18 |
That jump of ₹326 is why pricing just above the line rarely makes sense.
How to set this up in Shopify
Shopify's tax overrides apply a rate to a collection, not to a price band, so a catalogue with pieces on both sides of ₹2,500 needs either two collections (one at 5%, one at 18%) that you keep up to date as prices and discounts change, or an invoice app that applies the rule line by line from the HSN code and the price actually charged. The second is what keeps a sale weekend from putting a ₹2,700 dress, discounted to ₹2,300, on an 18% invoice.
What about invoices dated before 22 Sept 2025?
They keep the old rule: 5% up to ₹1,000 a piece, 12% above. A credit note on an old invoice reverses the tax at the rate on that invoice, not today's.