GST for Tailoring Shops and Boutiques, Explained Simply

Overview

• Registration: a boutique or tailor generally needs GST registration once aggregate turnover crosses ₹20 lakh in a financial year, or ₹10 lakh in special category states. Some situations need registration even below this.
• Tailoring rate: stitching a client’s own fabric is a service taxed at 5% (2.5% CGST + 2.5% SGST).
• Readymade garments: since 22 September 2025, apparel is taxed at 5% up to ₹2,500 per piece and 18% above ₹2,500.
• Composition: small service providers with previous-year turnover up to ₹50 lakh can choose a composition scheme at 6%, with conditions.

Please note: This guide is general information to help you understand GST, not tax advice. Rules and rates change through notifications. Check your own situation with a chartered accountant (CA) before you register, file or change prices. Information is as of October 2026.

Is tailoring a service or a sale of goods?

When a client brings her own fabric and you stitch it, you are doing work on goods owned by someone else. GST treats this as a service. It falls under heading 9988 (manufacturing services on physical inputs owned by others), which has a specific entry for tailoring services.

When you sell a finished garment made from your own fabric, such as a ready kurti or a lehenga you designed and stocked, that is a sale of goods and the garment rates apply.

Many boutiques do both. That matters for the registration limit and for how you write your invoices.

When do you need to register for GST?

The basic threshold

Under section 22 of the CGST Act, you must register in the state from which you supply once your aggregate turnover in a financial year exceeds ₹20 lakh. In special category states the limit is ₹10 lakh. Under the current definition in the Act, that lower limit applies to Manipur, Mizoram, Nagaland and Tripura.

“Aggregate turnover” means the total value of all your supplies across India under the same PAN, including exempt supplies. It is not your profit.

The ₹40 lakh limit is only for goods

You may have heard of a ₹40 lakh limit. Under Notification 10/2019-Central Tax, businesses exclusively supplying goods can stay unregistered up to ₹40 lakh in most states (some states kept a lower limit). A boutique that does tailoring is supplying services too, so it is not exclusively supplying goods. For most boutiques and tailors, the ₹20 lakh limit is the one that applies.

When registration is compulsory regardless of turnover

Section 24 of the CGST Act lists cases where you must register even below the threshold, such as making certain inter-state taxable supplies. If you courier finished garments to clients in other states, or sell through online marketplaces, ask your CA whether this applies to you, since some exemptions have been notified for small suppliers.

Voluntary registration

You can register even if your turnover is below the limit. Some boutiques do this to work with corporate clients or businesses that need a GST invoice. Once registered, you must charge GST and file returns, so think it through.

GST rate on tailoring services

Tailoring services are taxed at 5%: 2.5% CGST + 2.5% SGST (or 5% IGST for an inter-state supply). This is under Notification No. 15/2025-Central Tax (Rate), effective 22 September 2025, which lists “Tailoring services” under heading 9988 at 2.5% central tax. The earlier entry for tailoring was also at 2.5% central tax, so the overall 5% did not change.

Textile job work, for example embroidery or dyeing done for another business on their fabric, is also listed under heading 9988 at 2.5% central tax in the same notification. Job work outside the specific entries falls under a residual entry, which the GST Council moved from 12% to 18%, according to the GST Council’s 56th meeting press release.

SAC code: tailoring is under SAC heading 9988. Confirm the exact six-digit SAC with your CA before printing it on invoices.

Input tax credit rules for the 5% rate can depend on the specific entry and its conditions. Ask your CA before claiming credit on fabric, machines or other purchases.

GST on readymade garments after September 2025

The GST Council’s 56th meeting changed the rates on apparel from 22 September 2025, according to the official press release and the PIB backgrounder on textiles:

Made-up textile articles (Chapter 63) follow the same ₹2,500 per piece rule. The value is checked per piece, so a ₹6,000 three-piece suit may be billed differently from three separate items. Ask your CA how this applies to sets and bridal outfits.

Inputs that became cheaper

The same changes cut GST on several things boutiques buy. According to the press release, these moved to 5%: sewing machines and parts, sewing needles, sewing thread of man-made fibres, embroidery in the piece, lace, zari borders, and braids and trimmings. Tailor’s chalk became nil. Zip fasteners and plastic beads also moved to 5%. Check your supplier’s bills to make sure the right rate is charged.

The composition scheme for tailors and boutiques

Composition is a simpler option for small businesses: you pay a fixed low rate on turnover and file fewer, simpler returns.

For service providers (most tailors)

Under section 10(2A) of the CGST Act, a registered person whose aggregate turnover in the previous financial year was up to ₹50 lakh can opt for composition. Under Notification 2/2019-Central Tax (Rate), the rate is 3% CGST + 3% SGST, 6% in total.

Main conditions under the Act:

• You must not make inter-state outward supplies.
• You must not make non-taxable supplies.
• You must not supply services through an e-commerce operator that collects tax at source.
• All registrations under the same PAN must opt together.
• You cannot collect GST from customers and cannot claim input tax credit.
• The option ends once turnover crosses the limit during the year.

For goods sellers

If you mainly sell readymade garments, a separate composition option under section 10(1) exists for traders and manufacturers, with its own limits and rates. Such dealers can also supply some services within a small limit set in the Act. Ask your CA which option fits a boutique that both sells and stitches.

Is composition worth it?

Compare 6% on turnover with 5% charged to clients plus whatever input credit you can claim. For a tailor with few business purchases, regular registration may cost less. For a busy shop with simple records, composition may save effort. Your CA can run the numbers.

Invoices and returns in simple words

• Once registered, issue a tax invoice with your GSTIN, the client’s details where needed, a description, the SAC or HSN, the taxable value and the tax split.
• Advances: for services, GST is generally due when you receive the advance. Ask your CA how to handle advances for orders delivered later.
• Returns: regular taxpayers file GSTR-1 and GSTR-3B. Composition taxpayers file different returns, including the annual GSTR-4.
• Keep records of every bill, advance and expense.

How software can help

Clear records make GST much easier. VogueDesk creates GST invoices with HSN or SAC codes and CGST, SGST or IGST, carries advances onto the final invoice, and prepares GSTR-1, GSTR-3B and GSTR-4 reports that you or your CA can use for filing. GST invoicing is part of the Boutique plan and above; see the pricing page. It is a billing and reporting tool, not a replacement for your CA.

Starting out? Read how to start a boutique from home and how to build a blouse rate list.