New

Swipe

February 25, 2026

Blog |

Explore GST

Raw Silk: GST Rates and HSN Code 5002

Raw Silk: The reason why GST rates and HSN code 5002 are significant to traders, manufacturers, and exporters of silk products is that these items hold relevance. The right classification would assist businesses in evading penalties and enjoying the right tax benefits. India is a major silk producer in the world. The implementation of GST led to the organization and visibility of taxation on silk.

Nevertheless, there is confusion regarding the rates of GST to which they must apply and the appropriate code of HSN on raw silk. This guide gives you all the information that you need to know about Raw Silk GST rates, HSN Code 5002 classification, compliance requirements, and implications that apply to businesses in practice.

What is Raw Silk?

Raw Silk is simply the silk yarn that is extracted from the silkworm cocoons without any major processing. It is the raw material for the production of silk garments and fabrics. Raw silk does not match finished silk fabrics. It is raw or slightly processed filament silk, typically reeled off from cocoons.

The main features of raw silk:

Produced out of silkworm cocoons
Not dyed or woven
Silk cloth made out of this as a base material
Classified under GST of a different kind

This distinction should be understood since there are different rates of GST depending on the processing level.

Also Read: Top 10 Saree Manufacturers in India

HSN Code 5002 Classification

Raw silk is classified under

Chapter	Heading	Description
50	5002	Raw silk (not thrown)

GST Rate on Raw Silk

The duty rate of raw silk is based on the government notifications and exemptions

Product	HSN Code	GST Rates
Raw Silk	5002	5%

Currently This rate applies to

Raw silk supply in India
Inter-state sales and intra-state sales
Business-to-business transactions

One should check notifications regularly since the GST rates can be updated by the GST council.

Why Raw Silk Is Taxed at 5% GST

The textile industry is one of the priority industries in India. Reduction in GST is due to promotion of production and exports.

The 5% GST rate ensures:

Low costs of inputs to manufacturers
Gooder cash flow of silversellers
Favour to small silk farmers
Domestic and international competitive pricing

Reduced taxation is beneficial in boosting the silk industry in India, particularly in the states of Karnataka, West Bengal, and Assam.

Raw Silk Input Tax Credit (ITC)

Unless the business is registered under the GST, businesses that buy raw silk can claim Input Tax Credit.

To claim ITC:

The supplier should be registered under GST
HSN Code 5002 should be mentioned on a proper tax invoice
GST return should be properly filed
It must make payment on time as prescribed
ITC will allow the decreased taxation on the producers of silk

Example:

Assuming a trader purchases raw silk worth 1,00,000, he/she will pay 5% GST, and that will be 5,000. This 5000 may be deducted as ITC against output GST liability.

Also Read: GST on Woven Silk Fabrics: HSN Code 5007 Overview

Raw Silk Traders GST Compliance

Strict rules of GST compliance should be adhered to by silk traders and manufacturers.

Mandatory requirements

GST Registration
Correction invoicing HSN Code 5002
Timely GST return filing
Purchase and sales records maintenance

India vs Australia: A GST comparison of Raw Silk vs Silk Fabric

Raw silk is often confused with silk fabric by many businesses. GST classification is, however, different.

Product Type	HSN Code	GST Rate
Raw silk	5002	5%
Silk yarn (processed)	5004	5%
Silk fabric	5007	5%

Though the rates might be similar, the classification has to be correct according to the law.

Export of Raw Silk and GST

Raw silk exports are considered to be zero-rated supplies under GST.

This means

No GST is charged on exports
Refund of input taxes can be made by businesses
LUT (Letter of Undertaking) can be obligatory

Exporters are required to have the right documentation and shipping records in order to redeem the refunds in GST.

Popular Raw Silk GST Cases of Mistakes

Companies tend to commit classification and compliance mistakes.

Frequent Errors

Incorrect HSN code usage
Absence of GST information in the invoice
Wrong tax calculation
Non-filing of returns
Incorrect ITC claim

These errors can be avoided to facilitate the smooth operations of GST and avoid audits.

Forms needed to complete GST Filing

Raw silk dealers are expected to keep:

Tax invoice
Purchase bills
Registration certificate, GST, Transport documents
E-way bills (if applicable)

Adequate documentation is used to guarantee transparency and easy claims of input tax credit.

Conclusion

Raw Silk: GST Rates and HSN Code 5002 are very important in the taxation of the silk industry. Raw silk falls under HSN code 5002, and it is subject to 5% GST at present. Correct classification, invoicing, and compliance ensure that businesses do not suffer penalties and maximize tax deductions.

GST structure understanding will make the operations of the silk traders, manufacturers, and exporters run smoothly. Proper use of GST and dialing on time is vital for compliance.

Featured Posts

New GSTR-1 Filing Rules: HSN & Document Summary Now Mandatory from May 2025

GST Rate on Medicines and Other Pharmaceuticals

Income Tax notices based on GSTR-2A? Know why

Income Tax Return Filing: Simple Guide for Beginners in 2026

Wool Grease & Fatty Substances: GST Rate & HSN Code (1505)

All About GSTR-1 Filing: Eligibility, Penalties & Due Dates 2026

NRI Account Benefits for Indians Living Abroad7

GST Rate & HSN Code for Ceramic Products - Chapter 69

Featured Posts

You might also like

What is a Journal? A Beginner's Guide to Accounting Journals

How to Register in Meesho as a Seller

GST on wet grinders, price impact of GST on customers, price impact on consumers due to GST on wet grinder.