Circular No.: 13/13/2017-GST
Date of Circular: 27th October 2017
Relevant Sections and Rules:
- Customs Tariff Act, 1975: Chapters 50 to 55 – Classification of fabrics
- Central GST Act, 2017: General provisions on classification and rate of tax
Summary of Circular:
This circular provides a clarification on the classification and GST rate applicable to unstitched salwar suits or cut pieces of fabrics, which are sold before being tailored into garments.
- Nature of Cut Fabrics:
Fabrics that are cut from bundles or thans into smaller pieces (unstitched salwar suits) and sold in that form retain their classification as fabric, even if they are packaged or sold as sets. The cutting does not alter the nature of the product. - Classification and GST Rate:
Such cut fabrics are classified under Chapters 50 to 55 of the Customs Tariff Act based on their material (cotton, synthetic, etc.).
➤ They attract a uniform GST rate of 5% and are not eligible for refund of unutilized input tax credit (ITC), in accordance with existing rules on fabrics.
This clarification ensures consistency in tax treatment of unstitched fabric sets, regardless of cutting, packing, or how they are marketed to consumers.
Source: Circular No.: 13/13/2017-GST
