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Published on:

April 9, 2025

Udeetta Sarma

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Basics of GST

GST Rates and HSN Code 5806 for Other Narrow Woven Fabrics

The implementation of Goods and Services Tax in India has affected the textile industry in particular. HSN Code 5806 —Other Narrow Woven Fabrics — is one of the important factors for this sector. These textiles are employed in the clothing, packaging, industrial, and decorative sectors. In this blog, we will try to provide you with an overview of the GST rates on narrow woven fabrics, how the HSN Code 5806 classifies these types of fabrics and the compliance requirements involved for businesses in this segment.

Understanding HSN Code 5806

HSN Code 5806 comes under Chapter 58 in GST tariff schedule. Chapter 58 — “Special Woven Fabrics, Tufted Textile Fabrics, Lace, Tapestries, Trimmings and Embroidery” So, in particular, HSN Code 5806 covers narrow woven fabrics other than those of headings 5807 and 5808. It is specialized textile product used in various industries for multiple purposes.

Types of Narrow Woven Fabrics Under HSN Code 5806

Product Type	Description
Woven Ribbons	Used for decorative, textile, or packaging purposes.
Textile Tapes	Includes adhesive and non-adhesive tapes used in sewing, packaging, and medical fields.
Elastic Bands	Found in garments, medical applications, and sportswear.
Webbing	Durable and strong fabric strips are used in belts, bags, harnesses, and straps.
Labels and Tags	Fabric labels and tags are used for branding, garment marking, and identification purposes.

These fabrics serve diverse purposes and, depending on their specific composition and functionality, may attract different GST rates.

GST Rates for Narrow Woven Fabrics (HSN Code 5806)

GST rates for narrow woven fabrics under HSN Code 5806 depend on the nature of the product. Below is a table that categorizes them based on their respective tax rates:

Category	GST Rate
Narrow woven fabrics (non-elastic)	5%
Elastic narrow woven fabrics	12%
Labels, badges, and similar woven items	12%

The standard GST rate for most narrow woven fabrics is 5%, whereas items with added elasticity or specialized functions fall under the 12% GST bracket. Traders and manufacturers need to ensure the correct classification of their goods to avoid tax mismatches and penalties.

GST Compliance for Narrow Woven Fabric Businesses

Narrow Woven Fabrics Manufacturers, Suppliers and Importers are the ones who need to comply with the GST laws. Some important compliance requirements include:

GST Registration

All businesses whose annual turnover exceeds ₹40 lakhs (for goods) or ₹20 lakhs (for services) are required to register under GST.
The businesses that carry on interstate trade, need to obtain GST registration, irrespective of turnover.

GST Return Filing

Periodic GST Returns must be filed regularly, such as:
GSTR-1: Monthly/Quarterly return
GSTR-3B: Summary return every month for tax payments.
GSTR-9 : Annual return (required if business turnover exceeds ₹ 2 crores).

Proper HSN Code Mentioning

Therefore the correct mention of HSN Code 5806 in all invoices is significant.
If different items attract different GST rates, they should be billed separately mentioning correct HSN codes.

Eligibility for Input Tax Credit (ITC)

On the tax paid on raw materials used in production, ITC can be claimed by businesses, reducing the total liability of tax.
GST invoices are to be documented properly to claim their benefits.

By following these compliance guidelines, businesses can ensure smooth GST operations while avoiding penalties.

Impact of GST on the Narrow Woven Fabrics Industry

The GST has an impact on activities, both beneficial and adverse, particularly on narrow woven fabrics trading type services.

Key Benefits of GST for Narrow Woven Fabrics Industry

Uniform Tax Structure:

From the introduction of GST, multiple taxes namely VAT, excise duty, service tax, etc. have been replaced, thus simplifying taxation.

Unified National Market:

The end of state-wise taxes enables seamless inter-state trade across India.

Input Tax Credit (ITC) Benefits:

Companies can avail ITC on raw materials resulting in reduced total cost.

Market Transparency:

GST has made tax payments more accountable and transparent.

Implementation Challenges of Goods and Services Tax (GST)

Increased Compliance Costs:

Businesses have to comply with complicated GST filing requirements making the compliance costs higher.

Classification Issues:

Misclassification can result in incorrect tax applications, fines, and ineligibility for preferential treatment or exceptions.

Variability of Tax Rates:

With multiple GST rates (5% and 12%), businesses find it difficult to ascertain accurate rates of tax applicable.

GST has simplified taxation, and made it easier for businesses to operate across the country, despite these challenges.

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Conclusion

The above gives a better understanding of HSN Code 5806, and it tells about GST Rate on narrow woven fabrics that helps manufacturers, traders and distributors involved in the textile industry. Accurate classification, correct invoicing and timely filing of taxes are the fundamentals of GST compliance. Narrow woven fabrics subject to the 5% GST categorisation will require businesses to thoroughly assess their offerings to ensure that they are paying the correct amount of tax, as the 12% rate could easily lead some businesses to pay the wrong rate.

Staying abreast of the latest developments in GST and the tax landscape can help businesses avoid undue tax burdens, optimise input tax entitlements, and operate effectively in the textile industry. It is necessary for you as a manufacturer, wholesaler, or retailer to remain GST compliant because it will help you to stay transparent and will also prevent you from any legal issue in the future.

GST, therefore, has its fusion of opportunities and challenges for the businesses engaged in narrow woven fabrics. In the GST era, businesses must ensure that proper documentation of the accounts, tax planning, abide by the tax guidelines, and stay informed about the developments in the industry to make the most of the GST regime.

FAQs

1. What is the GST rate for narrow woven fabrics under HSN Code 5806?

Elastic narrow woven fabrics and labels/badges are taxed at a rate of 12%, while for non-elastic narrow woven goods, the sector attracts a goods and services tax at a GST rate of 5%.

2. In the case of businesses engaged in the supply of narrow woven fabrics, is GST registration required?

Yes, it is mandatory to register for GST if the annual turnover exceeds ₹40 lakhs (in case of goods) or ₹20 lakhs (in case of services) or if interstate trade is involved.

3. How can businesses claim Input Tax Credit (ITC) on narrow woven fabrics?

Businesses are eligible for claiming ITC on GST paid for raw materials utilized for manufacturing as long as they possess the invoices and the GST filing is in place.

4. What are the main GST compliance obligations of businesses?

GST compliance involves the following: (1) businesses must be registered under GST, (2) businesses must file regular GST Returns (GSTR-1, GSTR-3B, GSTR-9), (3) correct HSN code must be used to issue invoices, and (4) documentation must be maintained properly for ITC claims.

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