Sarees, whether designer or embroidered, will attract a five per cent Goods and Services Tax (GST), the tax department said today.
Clearing the air over whether sarees will be treated as garments or fabric, the Central Board of Excise and Customs (CBEC) said sarees are treated as fabric and it remains so even after embroidery etc as no new item emerges having a distinct name, character and use.
"Therefore the sarees, whether, embroidered or not would be taxed at the same rate at which the fabric is taxed," the CBEC said in a set of frequently asked questions (FAQs).
It said 5 per cent GST is levied on job processes relating to the textile yarn (other than man-made fibre/filament) and fabrics.
With regard to dress materials, the FAQ clarified that if the sale value if not exceeding Rs 1,000 then a 5 per cent GST will be levied and in cases where it exceeds Rs 1,000, a 12 per cent GST will be charged.
As per the GST rate decided by the GST Council last month, all categories of fabric attract a 5 per cent rate.
Man-made apparel up to Rs 1,000 will attract a 5 per cent tax and those costing above Rs 1,000, will attract 12 per cent.
In regard to sale of old dhotis, the CBEC said it would be treated as "worn clothing" and will be taxed as apparel based on sale value.
"As presumably the old cotton dhoti would be below the sale value of Rs 1,000 per piece, it would be taxed at 5 per cent," the CBEC said.
With regard to new dhotis, it clarified that the tax rate will be 5 per cent.
The CBEC has also clarified that jute handbags and shopping bags would be taxed at 18 per cent under the GST, which came into effect on July 1