What Are the Latest GST Slabs for Clothing and Footwear?
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Apparel and footwear priced up to ₹2,500 now attract a GST rate of 5% (raised from the earlier threshold of ₹1,000).
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Products above ₹2,500 are taxed at 18%, up from the previous 12% rate.
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All previous intermediate slabs like 12% (and 28% for luxury categories) are removed except for certain luxury or "sin" goods.
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Textile materials like cotton, silk, and jute remain at 5%, and tailoring services have dropped dramatically from 18% to 5% GST.
Positive Impacts for Indian Mass Manufacturers and Brands
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Broader 5% Bracket: The key GST benefit is for clothing and footwear up to ₹2,500, which now falls in the affordable 5% bracket, bringing down prices for most day-to-day and festive wear.
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Wider Reach for Indian Brands: Brands focused on the ₹1,000–₹2,500 range can now market more competitively to a price-sensitive mass market and attract shoppers previously deterred by higher GST.
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Boost for Small Boutiques: Local artisans, smaller designer boutiques, and new-age sustainable brands can operate with less tax compliance complexity and pass on savings, improving their standing against imported or unorganised sector goods.
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Growth in Mid-Premium Segment: With more products under ₹2,500, expect increased demand for high-quality Indian originals—especially for regional crafts, traditional sarees, and festive attire.
Negative Impacts and Industry Concerns
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Sharp 18% GST on Above ₹2,500: Apparel and footwear in the premium or designer category (above ₹2,500) now attract a steep 18% GST. This is a significant rise from 12%, resulting in likely price hikes for ethnic wear, premium shoes, and exclusive designer pieces.
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Aspirational Segment Squeeze: Boutique labels and premium Indian brands may need to absorb margin losses or pass on higher costs to customers, which could dent demand, especially during wedding and festive seasons.
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Product Price Engineering: The stark jump from 5% to 18% GST may push some manufacturers to dilute product features or repackage products just under the ₹2,500 mark, affecting value perception.
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Impact on Gifting and Luxury: For consumers seeking products priced just above ₹2,500, the higher GST rate could shift demand to unregulated sectors or encourage “split billing,” especially in gifting and luxury purchase scenarios.
The ₹2,500 Price Point: Opportunity and Risk
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Positive: The revised ₹2,500 cutoff unlocks new SKUs for brands previously limited by a lower GST ceiling. Expect more innovation and focus on high-quality, mid-tier products—great news for consumers and makers alike.
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Negative: The psychological impact of the ₹2,500 rule means many brands and boutiques will hover their products just at or below the threshold, potentially restricting creativity and assortment diversity in the premium category.
What Should Indian Brands and Boutiques Do?
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Revisit Pricing and Discounts: Analyze product catalogs to maximize inclusion under the 5% slab. Offer bundled deals intelligently without crossing the ₹2,500 slab for each item.
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Transparent Communication: Explain new pricing to customers—especially for products that become costlier due to increased GST on premium goods.
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Highlight ‘Make in India’ Advantage: Reinforce affordability, quality, and cultural authenticity in marketing—leveraging the GST reforms as a selling point for Indian-made fashion.
Final Thoughts: The Shopdibz Perspective
The GST changes present a mixed bag for India’s clothing and footwear sector. While the reforms foster growth, simplicity, and affordability at the mass market and mid-premium levels, premium brands and boutiques must innovate to justify higher prices or restructure their offering mix. At Shopdibz, we believe the path forward is clear: focus on Indian craftsmanship, transparent pricing, and creative value in every price segment. GST 2.0 is a new canvas for the future of Indian fashion—let’s make it vibrant and inclusive.
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