On 22 September 2025, India replaced its five main GST rates with four. If your product listings, invoices or price sheets still use 12% or 28%, they are out of date. For clothing and footwear sellers in particular, the change moved a lot of products to a lower rate — and a smaller number to a higher one.
The old slabs and the new ones
| Before 22 Sep 2025 | From 22 Sep 2025 | |
|---|---|---|
| Main rates | 0%, 5%, 12%, 18%, 28% (plus cess) | Nil, 5%, 18%, 40% |
| 12% slab | Many everyday goods | Removed — most items moved to 5% |
| 28% slab | Premium goods, plus compensation cess on some | Removed — most items moved to 18%; luxury and sin goods to 40% |
A few special rates continue for specific goods, so a product’s rate is still decided by its HSN code, not by its category name.
Clothing and footwear: the Rs 2,500 rule
This is the change that matters most to fashion sellers on Meesho, Flipkart and Amazon:
- Readymade garments sold for up to Rs 2,500 per piece are taxed at 5%; above Rs 2,500, at 18%.
- Footwear follows the same pattern per pair: 5% up to Rs 2,500, 18% above.
Before the reform, the line was Rs 1,000 and the higher rate was 12%. So three things changed at once: the threshold rose, the higher rate rose, and the 12% slab disappeared.
| Product | Price per piece | Before | Now |
|---|---|---|---|
| Kurti | Rs 599 | 5% | 5% |
| Shirt | Rs 1,499 | 12% | 5% |
| Jacket | Rs 2,199 | 12% | 5% |
| Blazer | Rs 3,499 | 12% | 18% |
For the large range between Rs 1,000 and Rs 2,500, tax fell from 12% to 5%. Above Rs 2,500, it rose from 12% to 18%.
What sellers need to update
- Your HSN and GST fields on every marketplace. Catalog templates carry a GST rate per product. A product still set to 12% is wrong, and products crossing the Rs 2,500 line need checking individually.
- Your invoices. Invoice templates and billing software defaults set before the reform may still offer 12% and 28%.
- Your prices. A lower rate leaves more of the listed price as taxable value — room to cut the price or keep the margin. A higher rate does the opposite; a product just above Rs 2,500 may be worth repricing below it.
- Your cost sheets. Margin calculations built on the old rates overstate or understate profit.
Products priced near Rs 2,500
A garment at Rs 2,599 pays 18%; the same garment at Rs 2,499 pays 5%. The Rs 100 price cut can be cheaper than the tax difference. Check how your marketplace treats discounts and the value it reports per piece, and confirm with your tax adviser for borderline products.
Try it: Recalculate prices with the GST calculator — free, no signup, runs in your browser.
For the arithmetic itself, see how to calculate GST on inclusive and exclusive prices.
Sources
Checked on 1 October 2026. Tax rules change; confirm against current notifications or with your tax adviser before relying on them.