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April 8, 2026

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GST rates for yarn of artificial staple fibres(HSN 5510)

If you are in the yarn business, one small GST mistake can spoil your whole return. This happens a lot with artificial yarn because many traders treat all yarn the same. They apply 5% and move on. Later, the mismatch shows up. For HSN 5510, the correct GST rate is 12% when the yarn is sold in bulk and not packed for retail.

What this HSN means

HSN 5510 is for yarn made from artificial staple fibres. In normal business terms, this usually refers to viscose yarn that you sell in cones, bundles, or hank to another mill, weaver, or trader, not to retail customers. It is not meant for direct retail sale. If you are supplying to:

Weavers

Knitting units

Fabric mills

Other yarn traders

Then this HSN is commonly the right one.

GST rates you should not get wrong

The rate is 12%, not 5%. Not something you “usually charge”. It has to be 12%. When you use the wrong rate, three problems start immediately:

Your buyer’s ITC becomes wrong

Your GSTR-1 does not match

You may have to pay the difference with interest

Textile notices often come from this exact mistake.

Official GST Rate Notification by CBIC

Simple yarn GST comparison

HSN	TYPE OF YARN	GST RATE
5205	Cotton yarn	5%
5509	Synthetic staple fibre yarn	12%
5510	Artificial staple fibre yarn	12%

Cotton is the only one at 5% in most common cases. Everything else in this category is generally 12%.

Where traders get confused

The confusion is not about the GST rate. It is about fibre type.

Cotton → natural

Polyester → synthetic

Viscose → artificial

Many people see soft yarn and assume cotton. That is where the wrong billing starts. Always check the purchase description before you create the sale invoice.

How you should show it on the invoice

A clean invoice should have:

HSN: 5510

Item name: Artificial staple fibre yarn

GST: 12%

Unit: kg or cone

Do not change the HSN for the same item every month. Keep it fixed in your item master. If you are using Swipe, you only have to set this once.

Input tax credit: where accuracy matters

You can claim ITC on your purchases, but only when everything matches. That means:

Correct HSN

Correct GST rate

Supplier filed return

Goods received

If your purchase shows 12% and your sale shows 5%, your data will not align.

Know about documents and forms for claiming ITC under GST

Job work situation

Many yarn traders send material for dyeing or twisting. That process is treated as job work and usually taxed at 5% for textile processing. But remember: The yarn itself is still 12% when you sell it. Keep proper delivery challans when sending goods for job work. This is a common gap in small textile units.

Retail packaging changes things

If you pack the same yarn in small consumer packs and sell it in retail, the classification can change. Do not blindly use the same HSN for both bulk and retail. Check how the product is labelled and sold.

Real example from textile market

A trader sold viscose yarn to a fabric unit but charged 5% GST. The buyer claimed 5% ITC. Later, the GST portal expected 12%. Now, the seller had to pay the balance tax, interest was added, and the buyer had to reverse ITC. All this because of one wrong rate.

Daily mistakes that create GST mismatch

Use cotton yarn GST for all yarn

Not mentioning HSN on invoice

Keeping different HSN for the same product

Doing billing in Excel without item master

These look small but cause big problems during return filing.

Why a billing app makes this easier

Manual billing depends on memory. That is risky. With a proper billing system: HSN stays fixed for each product.

GST applies automatically

Stock stays in one unit

Reports are ready for GSTR-1

You do not have to check every invoice at month end.

Know about Swipe Billing Application

Conclusion

For HSN 5510, keep it simple. Artificial staple fibre yarn sold in bulk means 12% GST. Don’t treat it like cotton. The rate is not the same. Don’t guess the HSN while making the bill. That mistake shows up later in returns. And once you set the right HSN for that item, don’t keep changing it. Save it once in your billing system and use it every time. Your GST reports will stay clean and matching will be easy. If you want less manual work and fewer errors every month, using a billing app like the Swipe Billing App will make billing faster and GST filing much smoother.

FAQs

1. Is viscose yarn covered under HSN 5510?

Yes. Viscose yarn made from artificial staple fibre comes under HSN 5510 and is taxed at 12% when sold in bulk.

2. Can i charge 5% if my customer asks for lower GST?

No. GST rate depends on the product, not on the customer’s request.

3. Is HSN required for small businesses?

If your turnover crosses the prescribed limit, HSN is mandatory. Even below that, using HSN keeps your record clean.

4. What happens if i used 5% earlier by mistake?

Do not continue the mistake. Correct it in future invoices. If needed, adjust in returns with proper advice from your accountant.

5. Does the unit of measurement matter?

No. You can bill in kg, cone, or bundle. The GST rate remains 12% as long as the product classification is the same.

6. Can i claim ITC on this yarn?

Yes, if the supplier has uploaded the invoice and all GST details are correct.

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