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Alankar Mishra

September 19, 2024

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Basics of GST

6307 HSN Code for Made-up Textile Articles

The textile industry is integral to the economy of the country, both in terms of the domestic markets, as well as exports. In terms of GST compliance, persons dealing in manufacturing, trading and importing of textiles are required to understand the HSN code which is prescribed for the categorization of goods under the Goods and Services Tax. A common HSN code applicable for a large number of textile products is 6307 which relates to “made-up” textile articles.

As we will see in this extensive guide, there is a lot of information concerning the 6307 HSN Code and its relevance in the textile sector, other particulars like the GST rates applicable on such items, compliance measures for industries manufacturing and dealing with made-up textile articles and such.

What is the HSN Code?

HSN codes have been described as a systematic approach that is employed across the globe for the categorization of various goods, for taxation. These codes were developed under the auspices of the World Customs Organizations, and these codes have been employed to provide unique identifiers to commodities to facilitate uniformity in areas such as customs, international trade and taxation across nations.

In India, HSN codes are employed for the categorization of products and fixing their respective tax rates under the GST system. The HSN code is of 8 digits, the first two digits constitute the chapter, followed by two headings and the last four are further sub-classifications of the product.

What Does the 6307 HSN Code Represent?

6307 HSN Code represents “made up textile articles”, which is quite an open umbrella as many textile products have been subjected to alterations or finishing processes. ‘Made up’ are those types of textile products which do not exist in the form of raw materials only, but are more often than not stitched or sewn or through other processing into finished products.

Made-up Textile Articles under the 6307 HSN Code Include:

1. Floor and dishcloths

2. Duster & cleaning cloths

3. Curtains & drapery

4. Table covers and napkin & other table cloths

5. Cushion & pillow covers

6. Bed coverlets and quilts

7. Sofa covers and other protective covers

The definition of the 6307 HSN code covers mainly goods made of textile fabric yet does not fall into any specific division occupations, such as garments, or coverings for the body. This classification includes and encompasses a wide range of classified textile household and industrial goods.

GST Rates for 6307 HSN Code: Made-up Textile Articles

As stated above GST rates for goods bearing the code of 6307 HSN vary depending as in terms of the type of product as well as its application. Generally, however the GST rates for made-up textile articles of this category range between 5%,12% or 18%, according to the particularized product.

GST Rates for 6307 HSN Code:

5% GST Rate: The low rate is levied on a good number of made-up textile articles such as pillowcases, dish clothes, floor clothes, and other similar household articles. This rate is directed towards ensuring that basic household goods are not too expensive.

12% GST Rate: This rate is charged on advanced and high-value textile articles such as particular figures, dry cleanable curtains, bedspreads and a few furnishings.

18% GST Rate: This rate is charged on high-priced textile articles that are industrial like heavy curtains used such as certain packed industrial linens or some high-end made-up textiles.‍

Examples of Products under HSN Code 6307

Product Name	Description	HSN Code	GST Rate
Pillow and Cushion Covers	Textile materials sewn and completed for specific purposes, imported as finished textile articles.	6307	5%
Table Covers and Napkins	Includes table mats, napkins, and placemats made from textile fabrics.	6307	5%-12%
Curtains and Drapes	Household and commercial curtains and drapes made from textiles.	6307	12%-18%
Bedcovers, Spreads, and Blankets	Finished textile articles for household use, including bedcovers, quilts, and blankets.	6307	12%
Clothes and Wipes for Cleaning	Cleaning materials like clothes, dusters, and mops for cleaning purposes.	6307	5%

‍Who Should Use the 6307 HSN Code?

Businesses engaged in the manufacture, buying and selling and import and/or export of textile articles that are classed as made-up goods fall under HSN code 6307. This includes:

Textile Producers: Companies incorporated in the making of the completed end articles of textiles e.g. bedspreads, curtains, table linen, etc. make use of the 6307 HSN code for tax identification for invoicing and GST registration compliance for easy and quick filing of returns.

‍Retailers and Traders: Retailers and traders of ready-made textile items apply this code while preparing GST invoices and returns.

Importers and Exporters: Companies involved in the export/import of textiles have responsibilities and have to take heed to classify their goods by proper HSN codes for easy clearance at customs and tax payments.

Impact of GST on the Textile Industry

With the upcoming GST and the implementation of the applicable 6307 HSN code, some businesses in the textile industry have experienced overhauls. These include:

Taxation Clarity

Before the coming of GST, the textile sector faced the existence of several taxes, for instance, VAT, excise duty, service tax, and many others. After the introduction of GST, it was possible to eliminate all other forms of tax and consolidate them into one form of taxation. After this enforcement, companies are only concerned with GST compliance and this has led to diminishing paperwork and exposure to practical work.

Input Tax Credit (ITC)

GST also lets the manufacturers and traders take the Input Tax Credit (ITC) on inter-sectoral catechism where taxes are paid as input in the production of textile articles. This also improved cash flow for most manufacturers since their GST burden would be met by reducing output tax after restrictive credits on input purchases.

Impact on Pricing

Consumer pricing is influenced by the individual prices of the given textile articles' GST as well. The GST rate of 5% on simple made-up articles such as dishcloths and pillow covers helps avoid an increase in pricing for mass-made simpler textile goods. However, rates of 12% or 18% GST for more processed or luxury textile articles are prone to increased prices.

Compliance Requirements

Businesses dealing with the manufacturing and sales of textile articles bear a responsibility to ensure that products are correctly classified under HSN code 6307 and are GST compliant. This involves raising tax invoices that contain the appropriate HSN code, submitting periodic GST returns, and also declaring Input Tax Credits.

How to Determine the Correct GST Rate for 6307 HSN Code Products

The correct GST rate for taxpayers under HSN code 6307 is determined by the following:

Product Type: Basic textile articles, especially cleaning cloths and household linen fabrics are commonly within the lowest tax band of 5%, while certain other products like decorative curtains and high-end bedspreads can be taxed at 12% or even 18% which is most often used in specialized industries.

Intended Use: Household or general commercial products may attract lower rates of GST while products used for industrial or specific purposes may be charged at higher rates of GST.

Processing Level: The more processing or finishing a product goes through, the higher the GST rate. For instance, plain pillow covers are likely to attract a 5% GST, whereas, embroidered or decorative pillow covers are likely to attract a 12% GST.

Every business should look at the GST rate schedule that the government provides to see what the right GST rate is applicable since it gives comprehensive information on the tax ratings for various categories of goods and services.

Compliance Requirements for Businesses Using HSN Code 6307

Specific enterprises, engaged in the manufacture, trade, or importation of made-up textile articles under the 6307 HSN code, are bound by the following provisions of the GST laws: HSN Code on Invoices: Out of the businesses that have an annual total sales turnover of more than rupees one point five crores, HSN codes are obligatory on invoices. There must be a proper classification under HSN code 6307.

Regular Business Oriented GST Returns: The business should undertake the submission of RTG necessary returns to regular Lada business oriented GSTR 1 and 3b, that contain sales and purchases accompanied by inside documentation containing Input Tax Credit.

ITC Claims: Purchasers should also pass claims for ITC if they have paid tax on the consumption of goods that would be manufactured into textiles. Where the records of transactions are higher than ordinary records, there must be thorough-keeping of records.

Tax Audit And Compliance On GST: The enforcement of GST on large businesses may require GST auditing processes. The presence of detailed documentation in the form of invoices, orders, purchase requests, and ITC, must be contained to pass orderless audits and avoid infractions of tax laws.

Conclusion

The HSN code 6307 is important for classifying other made-up textile articles within the GST structure. It is also important to know what rate of GST is correctly applicable where this code is used in the manufacturing or sale of textile products. Such classification enables businesses to comply with provisions, make use of the Input Tax Credit and more so minimize taxation costs and enable the business to run smoothly.

Understanding the complexities of HSN code 6307 is central to appreciating GST regulations and its management in any business dealing with the manufacture, sale or import of textiles.

FAQs

1. What types of goods fall under HSN code 6307?

HSN Code 6307 is used to classify products like pillowcases, bed linens, curtains, table covers, and kitchen towels. These are articles of textile materials which have either been sewn or otherwise finished.

2. What is the GST applicable for items fitting HSN Code 6307?

For HSN Code 6307 products, the GST rates range from a minimum of 5% to a maximum of 18% based on the nature of the product and how it was supposed to be used.

3. Is it mandatory to put the HSN code on the invoices?

Yes, the answer is in the affirmative: businesses having an annual turnover of over INR 1.5 Crores must reproduce on the invoices the HSN code for items falling under code 6307.

4. Can a business take ITC on GST paid against Goods under the UITC scheme?

Yes, a business will be entitled to ITC regarding GST paid on the inputs for the manufacture of textile articles categorized under HSN code 6307, so long as the articles are used for purposes of business.‍

5. How do I determine the correct GST rate for a textile product?

The correct GST rate depends on the type of product, its processing level, and its intended use. For more appropriate measures applicable, consult the government’s GST rate schedule to check on the rates applicable to products.

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