Fibre-neutral 5% from fibre to fabric
Notification 9/2025-Central Tax (Rate) cut man-made staple fibres and filament yarns from higher rates to 5%, aligning them with cotton. Schedule I now covers synthetic and artificial filament yarns (5402 to 5406), woven fabrics of manmade filaments (5407, 5408), staple fibres (5503 to 5507), yarn of manmade staple fibres (5509 to 5511), woven fabrics of manmade staple fibres (5512 to 5516), knitted fabrics of chapter 60, and cotton, silk and wool yarns and fabrics. The PIB note describes this as removing the inverted duty structure in manmade textiles. For a trader, it means one rate on almost every fabric and yarn line.
The Rs 2,500 per piece test for made-ups
Once the trader sells cut pieces as made-up articles, bedsheets, curtains or garments, the rate depends on value. Chapters 61, 62 and 63 goods are at 5% up to Rs 2,500 per piece and at 18% above that under Schedule II. A trader dealing in suit lengths packed as unstitched dress material sets should check whether the goods are sold as fabric or as a made-up set, because that decides whether the value test applies.
E-way bill and transport
Bales sent through transporters usually exceed Rs 50,000 per consignment. The trader must generate an e-way bill with the transporter ID and update the vehicle details or ask the transporter to do so. Where cloth goes first to a processing house for dyeing on job work, it moves under a delivery challan with an e-way bill, and the processor bills only the job charge at 5%.
Credit notes for rate difference and returns
Textile buyers often return thans for defects or ask for rate difference after the season. Returns should be handled through a GST credit note linked to the original invoice, and post-sale discounts reduce taxable value only if agreed before the sale and linked to specific invoices. Otherwise the discount is a commercial credit note without tax adjustment.
E-invoicing for wholesale traders
Textile wholesalers in major markets often cross the e-invoice threshold. Once covered, every B2B invoice must have an IRN before the goods leave, and the e-way bill can be generated from the same data. Traders who issue hundreds of small bills to retailers should make sure their billing software handles this in bulk.