Finance — Business

Reduced GST rate on apparel and footwear costing up to ₹2,500 could be implemented at 5% - Take a look at the details.

Goods priced up to ₹1,000 currently under a 5% GST bracket will broaden to include items costing up to ₹2,500, resulting in more affordable goods under the revised GST structure.

, and Administrator

2025 September 13 . 5:22 AM

2 min read

Taxation for clothes and shoes with a value up to ₹2,500 may be reduced to a 5% Goods and Services... — Taxation for clothes and shoes with a value up to ₹2,500 may be reduced to a 5% Goods and Services Tax (GST) rate. Details of the change are available for review.

Reduced GST rate on apparel and footwear costing up to ₹2,500 could be implemented at 5% - Take a look at the details.

The 56th meeting of the GST Council, currently underway and led by Finance Minister Nirmala Sitharaman, is set to bring significant changes to the Goods and Services Tax (GST) structure in India.

The council is discussing a short-term compensation mechanism for states losing revenue due to rate cuts, as they move ahead to do away with the 12 and 28 per cent GST slabs. The majority of the items from the 12 and 28 per cent GST slabs will be moved to the 5 and 18 per cent respectively.

Nearly 99 per cent of items currently taxed at 12 per cent are likely to be moved into the 5 per cent GST slab, while about 90 per cent of items under the 28 per cent GST slab will be brought under the ambit of the 18 per cent category.

Goods considered "sin" products like tobacco will continue to draw a higher 40% GST levy. A notable decision made during the meeting was to bring footwear and apparel priced up to ₹2,500 under the 5 per cent GST slab. Previously, apparel and footwear up to ₹1,000 were placed under the 5 per cent GST slab.

The GST Council's decision aims to make goods costing up to ₹2,500 more affordable. This move follows Prime Minister Narendra Modi's announcement of drastic GST reforms during his Independence Day speech, where he promised a "very big gift" for Diwali. The Finance Ministry's announcement of lowering the GST slabs came shortly after his speech.

The proposals to bring about GST reforms were approved by the Group of Ministers (GoM) last month. GST, which subsumed a host of taxes and local levies, was rolled out on July 1, 2017.

Noteworthy, the compensation cess structure as it exists today is unlikely to be extended. The 56th GST Council meet will conclude on September 4, after having begun on the same day. The meeting assumes significance given PM Modi's GST reforms announcement.

The GST Council's decisions aim to simplify the tax structure and make it more consumer-friendly, with most goods across India currently falling under the 12, 18, and 28 per cent GST slabs. The council will continue to discuss and finalise the details of these reforms in the coming days.