GST Slab Threshold May Rise to ₹1,500: Relief for Clothing & Footwear Buyers Soon?
In a significant move to boost consumption and reduce tax burdens, the Group of Ministers (GoM) on GST rate rationalisation is reportedly considering an upward revision of the GST slab threshold for textiles and footwear. If approved, products priced up to ₹1,200–₹1,500 may remain in lower tax brackets, benefitting millions of everyday consumers and MSME retailers.
As per current norms:
- Apparel under ₹1,000 attracts 5% GST, while above that it’s taxed at 12%.
- Footwear priced below ₹1,000 is taxed at 12%, and 18% if priced higher.
This proposed shift could redefine affordability—especially for middle-income households—by increasing the value limit under lower tax slabs.
🧾 Why Is the GST Council Considering This Change?
- To Spur Demand in Key Sectors
The textile and footwear industries are price-sensitive. Even a small increase can shift a product into a higher GST slab, discouraging mass-market purchases. Raising the threshold makes premium quality goods more accessible. - Support for Post-Budget Measures
This proposal follows the Interim Budget 2024, which provided direct tax relief under the new tax regime. The GST update is expected to work in tandem by lowering indirect taxes, supporting a two-pronged push for consumption-led growth. - Formal Sector Upliftment
The move may also help formalize trade further. With higher thresholds, more goods will be sold under invoices and not through unregistered channels, supporting the digital GST framework.
🏛️ Legal & Policy Backing
- The GST Council, under Article 279A of the Constitution, is empowered to recommend changes in tax rates and thresholds.
- This shift is expected to be in line with Supreme Court’s stance in Union of India vs Mohit Minerals (2022) where transparency and equity in indirect taxation were emphasized.
- Rate rationalisation efforts were earlier outlined in the 15th Finance Commission’s report, advocating fewer slabs and broader thresholds for simplicity and compliance.
📊 Potential Benefits for Stakeholders
| Stakeholder | Impact |
|---|---|
| Consumers | Lower prices on daily-wear apparel & footwear |
| Retailers/MSMEs | Improved inventory movement; better margins on sub-₹1,500 goods |
| E-commerce | Boost in sales for online apparel/footwear segments |
| Government | Enhanced compliance, formalisation, and wider tax base |
📌 What’s Next?
- The final recommendation from the GoM is expected in the next GST Council meeting.
- If implemented, this could roll out just ahead of the 2025 festive season, aiding both demand and revenue.