Introduction:

The 56th GST Council meeting held in early September 2025 brought several changes to India’s Goods and Services Tax (GST) structure, including important updates for the textile sector. For saree and lehenga traders, it’s crucial to understand these revised rates so you can charge the correct GST and explain the changes to your customers. This post breaks down the new GST rules for sarees and lehengas in simple terms, focusing on what you need to know now. All changes discussed will take effect from 22nd September 2025.

GST on Sarees – Unchanged at 5%

Sarees remain taxed at 5% GST: According to the Central Board of Indirect Taxes & Customs (CBIC) FAQs, sarees are treated as unstitched fabric and are taxed based on their material, but in all cases the GST rate is 5%. In other words, whether you sell a cotton saree, a silk saree, or a synthetic saree, the GST remains 5%. The CBIC’s official classification table (shown above) lists sarees under various Harmonized System (HS) codes by fabric type – silk (HS 5007), cotton (HS 5208/5209), man-made fiber (HS 5407/5408), etc. – and confirms that all fall under the 5% GST slab. There has been no change in the tax rate for sarees after the 56th Council meeting, so you should continue charging 5% GST on saree sales as before. This uniform rate across all saree materials makes it straightforward: a saree of any value or fabric still attracts only 5% GST. You can confidently inform customers that sarees remain in the lowest GST category for textiles.

GST on Lehengas and Stitched Garments – New Two-Tier Rate Structure

In contrast to sarees, GST rates for lehengas and other stitched garments have been revised based on their price. Lehengas (which are considered ready-made apparel) will now be taxed under a two-tier structure: - If the selling price is ₹2,500 or below per piece: GST rate is 5% (same as before for lower-priced apparel). - If the selling price is above ₹2,500 per piece: GST rate is 18%, a higher slab.

This means affordable or mid-range lehengas up to ₹2,500 will continue to incur only 5% GST, but any lehenga priced above ₹2,500 will attract 18% GST going forward. The change was decided in the 56th GST Council meeting as part of a broader rationalization of tax slabs for textiles.

Previous vs New Threshold: To put this change in perspective, under the earlier GST rules (before this meeting), clothing was taxed at 5% GST only up to a price of ₹1,000 per piece, and any apparel above ₹1,000 was subject to 12% GST. That old threshold has now been more than doubled to ₹2,500, and the higher tax rate on expensive garments has increased from 12% to 18%. In effect, many items that used to fall in the 12% category (like a lehenga priced at ₹2,000) will now fall in the 5% category, which is good news for those selling or buying lower-priced garments. However, items that are above the new ₹2,500 cutoff (for example, a designer lehenga costing ₹5,000) will see GST at 18%, which is a jump from the previous 12% rate. This two-slab structure (5% for cheaper clothes and 18% for pricier ones) simplifies the rate system and aligns with the Council’s move toward a two-rate GST framework.

For traders, the key takeaway is to check the price of each garment you sell: - If a lehenga or any stitched apparel item is priced ₹2,500 or less, charge 5% GST (as you would for most budget-friendly clothes). - If it’s priced above ₹2,500, charge 18% GST (the higher rate for higher-value clothing). - (Previously, the cutoff was ₹1,000 – anything above ₹1,000 used to incur 12% GST, but this is no longer the case.)

By updating your pricing and billing to this new threshold, you ensure compliance with the latest rules. For example, suppose you sell a lehenga for ₹2,400 – it remains in the 5% bracket. If you sell another lehenga for ₹3,000, you must apply 18% GST on that sale. This change may affect how you price your products and explain costs to customers, especially if an item’s price hovers around the ₹2,500 mark.

Effective Date and What Traders Should Do

All the above changes in GST rates will come into effect from 22nd September 2025. This means that starting on that date (which coincides with the first day of Navratri 2025), you need to charge the new GST rates on applicable items. Here’s how to prepare and communicate these changes:

• Update Billing Systems: Ensure your invoicing or billing software is updated to apply the 18% rate for garments priced above ₹2,500 from 22nd Sept onward. Until that date, the old rates (5%/12%) still apply, but afterwards the new 5%/18% structure kicks in.
• Educate Staff and Partners: Inform your sales staff, accounts team, and business partners about the new GST threshold. They should know that a ₹2,600 lehenga now carries 18% GST, whereas previously it would have been 12%. This will help avoid any billing mistakes.
• Communicate to Customers: Be ready to explain to customers why a particular item has a higher tax. For instance, if a customer asks why a lehenga above ₹2,500 has 18% GST, you can confidently explain that the government revised GST rates effective 22nd September 2025 – cheaper garments (₹2,500 or below) are taxed at 5%, but higher-value garments are taxed at 18%. Emphasize that this is an official change stemming from the GST Council’s decisions, not an arbitrary store policy. Customers will appreciate a clear explanation, and it builds trust when you can cite the official rule change.
• No Change for Sarees: You should also clarify to your customers (if it comes up) that sarees remain at 5% GST with no changes. Since sarees are considered fabric and not a stitched outfit, they don’t fall under the new price-based slab system. All saree varieties – from a simple cotton saree to an expensive silk saree – still attract only 5% GST, as confirmed by the CBIC’s FAQs. This consistency can be a selling point, reassuring customers that traditional sarees continue to be taxed minimally.

References and Official Clarifications

These changes were part of a larger GST revision approved in the 56th GST Council meeting chaired by the Union Finance Minister. Official press releases and documents from that meeting highlight the move to a simplified two-rate structure, with most items now falling into either 5% or 18% GST categories. The Central Board of Indirect Taxes & Customs is expected to issue detailed notifications and updated FAQs for clarity. In fact, the CBIC’s existing FAQ document already clearly outlines the GST treatment for sarees, listing different saree types under their respective HS codes – all taxed at 5%. Traders are encouraged to refer to such official FAQs and circulars for any detailed classification questions.

In summary, as a saree or lehenga trader you should now charge 5% GST on all sarees (no change) and either 5% or 18% GST on lehengas and other apparel depending on the price per piece (with ₹2,500 as the dividing line). These rates apply from 22nd September 2025. By staying informed of these updates, you can apply the correct GST rates on your products and explain the tax to customers with confidence and accuracy. This will help you remain compliant with tax laws and maintain transparency in your pricing. Happy selling, and rest assured that you’re now up-to-date with the latest GST rules affecting your textile business!

Sources: Official GST Council announcements and CBIC FAQs on GST rates.

To Know More,

Connect DOST Soumen Shee

Functional Consultant, GST DOST

soumen@gstdost.com

Helpline: 90 8888 2000