Looking for expert help with Embroidery and zari GST rate and HSN code? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Embroidery job work on textiles for a registered owner is 5% GST under SAC heading 9988 (Notification 11/2017-CT(R), S. No. 26(ii)(g), as substituted by 15/2025-CT(R)).
- Zari thread (5605), zari borders (5809), zari articles and embroidery in the piece (5809, 5810) are all 5% (Notification 9/2025-CT(R), Sch I S. Nos. 353, 372-374).
- Work for an unregistered customer isn't job work (Section 2(68), CGST Act). Standalone embroidery for a walk-in customer is safer billed at 18%.
- Embroidery machines are 18% (8447) while sewing machines are 5% (8452). Imitation zari makers can't get a refund of credit on polyester film (5/2017-CT(R), S. No. 6AA).
- Job workers register above Rs 20 lakh, and customers deduct 1% or 2% TDS on charges above Rs 30,000 a bill or Rs 1 lakh a year.
What is the GST rate on embroidery job work? Embroidery done on fabric, sarees or garments owned by a registered customer is job work under SAC heading 9988 and attracts 5% GST (2.5% CGST plus 2.5% SGST) under S. No. 26(ii)(g) of Notification 11/2017-Central Tax (Rate), as substituted from 22 September 2025. Embroidery on goods of an unregistered owner is outside job work and is usually 18%.
Walk into an embroidery unit in Surat, Varanasi, Bareilly, Lucknow or Hyderabad's old city and you'll usually find two kinds of work on the same floor. Some machines run a saree trader's fabric on a per-piece rate. Others turn out the unit's own embroidered borders, patches or zari laces for sale. Down the lane, a zari unit is winding imitation zari thread from metallised film. Each of these carries a different GST position, and the gap between 5% and 18% often comes down to one detail: whether the customer has a GSTIN. This post covers GST rates, registration, job work paperwork, the zari refund bar and income tax for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the Income-tax Act 2025 sections that apply from 1 April 2026. It's written for embroidery, aari, zardozi and zari unit owners and the accountants who file for them.
What GST rate applies to embroidery and zari work?
Start with one question: is the cloth yours or the customer's? If it's the customer's, you're supplying a service. If it's yours, you're selling goods, and the goods rate applies.
Tax Rate Chart
GST for Embroidery and Zari Units (from 22 September 2025)
Embroidery job work on textiles for a registered owner (9988)
11/2017-CT(R) S. No. 26(ii)(g)
Tailoring services
11/2017-CT(R) S. No. 26(vi)
Other treatment or process on goods of an unregistered owner
11/2017-CT(R) S. No. 26(vii)
Zari thread, real or imitation (5605)
9/2025-CT(R) Sch I, S. No. 353
Zari borders and woven metallised fabrics (5809)
9/2025-CT(R) Sch I, S. No. 372
Zari articles: kasab, salma, dabka, gota, sitara, badla (5809, 5810)
9/2025-CT(R) Sch I, S. No. 373
Embroidery in the piece, strips, motifs, embroidered badges (5810)
9/2025-CT(R) Sch I, S. No. 374
Source: CBIC Notifications 9/2025-CT(R) and 11/2017-CT(R) as substituted by 15/2025-CT(R); CT(R) list checked up to 10/2026-CT(R) (27-28 October 2026), none of which amends these entries
If you sell finished embroidered garments, the garment rate applies, not the embroidery rate: 5% up to Rs 2,500 a piece and 18% above it on the full value. Our garment and hosiery units guide explains that split.
Example: a registered trader's sarees. A saree trader with a GSTIN sends 200 sarees for zardozi work at Rs 1,200 a saree. Your charges are Rs 2,40,000. GST at 5% is Rs 12,000 (Rs 6,000 CGST plus Rs 6,000 SGST), and the trader takes credit on it. GST is charged on your work charges only, not on the value of the sarees.
What if the customer has no GSTIN?
This is where most embroidery units get the rate wrong. Section 2(68) of the CGST Act defines job work as a treatment or process "on goods belonging to another registered person". A bride bringing her own lehenga fabric, a boutique without registration or a small tailor who isn't registered can't give you job work in the GST sense.
That work drops into one of two items in S. No. 26 of Notification 11/2017-CT(R):
- Item (vi), tailoring services, 5%.
- Item (vii), any treatment or process on goods belonging to another person, 18%.
The notification doesn't define "tailoring", and we haven't found a CBIC circular that places embroidery in either item. Embroidery done as part of stitching a garment for the customer sits closer to tailoring. Standalone embroidery on a customer's own fabric is safer billed at 18% until CBIC clarifies.
Example: a walk-in bridal order. A customer brings lehenga fabric and pays Rs 30,000 for hand embroidery. At 18% the GST is Rs 5,400, so the bill is Rs 35,400. Billing it at 5% (Rs 1,500) when 18% applies leaves you short Rs 3,900 in tax, plus interest, out of your own pocket. Ask for the GSTIN before you quote. If there isn't one, quote inclusive of 18%.
What GST do you pay on threads, film and machines?
Most embroidery inputs are 5%, the same as your output, so credit rarely piles up. The exceptions are machines, plastic film and imitation stones. All entries below are from Notification 9/2025-CT(R).
| Input | HSN | Rate | Entry |
|---|---|---|---|
| Cotton and MMF sewing and embroidery thread | 5204, 5401, 5508 | 5% | Sch I, S. Nos. 332, 340, 346 |
| Zari thread (real or imitation) | 5605 | 5% | Sch I, S. No. 353 |
| Glass beads | 7018 | 5% | Sch I, S. No. 408 |
| Sewing machines, needles and parts | 8452 | 5% | Sch I, S. No. 435 |
| Embroidery, lace and braid machines | 8447 | 18% | Sch II, S. No. 434 |
| Imitation pearls and imitation stones (glass) | 7018 | 18% | Sch II, S. No. 257 |
| Plastic and polyester film, sheets and foil | 3920, 3921 | 18% | Sch II, S. Nos. 121, 122 |
Machines. A multi-head computerised embroidery machine is 18%, not 5%. If your unit is registered and uses the machine for taxable supplies, you can take the full credit. Spread over a year or two of 5% output, a large machine purchase builds up credit that the inverted duty refund won't return, because Rule 89(5) of the CGST Rules counts credit on inputs only, not on capital goods.
Imitation zari makers. Imitation zari thread is 5%, but the metallised polyester or plastic film it's made from is 18%. Normally Section 54(3)(ii) of the CGST Act would let you claim a refund of that inverted credit. Notification 20/2023-CT(R) closed that door from 20 October 2023 by adding S. No. 6AA to Notification 5/2017-CT(R): no inverted duty refund for "imitation zari thread or yarn made out of metallised polyester film/plastic film". Its Explanation limits the bar to credit on the film itself.
Say you sell Rs 10,00,000 of imitation zari thread in a quarter at 5%, so output tax is Rs 50,000. You buy Rs 4,00,000 of metallised film at 18% (Rs 72,000 credit) and Rs 2,00,000 of textile yarn at 5% (Rs 10,000 credit). Your credit of Rs 82,000 is Rs 32,000 more than your output tax. That Rs 32,000 comes from the film, so it can't be refunded. It stays in your electronic credit ledger for future output tax. Price your thread with that in mind. Our inverted duty refund guide covers the refund for goods that aren't barred.
Registration: Rs 20 lakh or Rs 40 lakh?
Job work units. Embroidery on customers' goods is a service. Section 22(1) of the CGST Act sets the limit at Rs 20 lakh, or Rs 10 lakh in special category States. The Rs 40 lakh option is only for suppliers "engaged exclusively in the supply of goods", so one job work order takes you out of it.
Units selling only their own goods. A unit that only makes and sells its own laces, borders, patches or zari thread within its State can wait until Rs 40 lakh under Notification 10/2019-Central Tax, except in the States that opted out: Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand. Those use Rs 20 lakh, or Rs 10 lakh where the special category proviso applies. A Hyderabad unit selling only its own goods therefore registers above Rs 20 lakh, not Rs 40 lakh. Section 24 makes registration compulsory from the first inter-State sale of goods, whatever your turnover.
Our registration limit guide has the detail, and our GST registration service files the application for you.
Job work paperwork when a trader sends you fabric
The trader (the "principal") carries most of the paperwork under Section 143 of the CGST Act, but your records are what they rely on. Here's how a typical lot moves.
Step-by-Step Guide
A Job Work Lot from Receipt to Return
Receive goods under the trader's delivery challan
The principal sends fabric or sarees without tax under a challan with the details in Rule 55 of the CGST Rules (Rule 45(1)). Keep a copy with your lot register.
Record quantity in and out
Log pieces received, pieces returned and any rejects against each challan. Section 143(2) puts the accounts on the principal, but your register settles disputes.
Return within one year
Inputs must go back to the principal, or be supplied from your premises, within one year of being sent (Section 143(1)). Otherwise the principal is treated as having supplied them to you on the day they were sent (Section 143(3)).
Bill your charges at 5%
Raise a tax invoice for the work charges, quoting the principal's GSTIN. A registered principal takes credit on it.
Waste and scrap
If you're registered, you can sell thread waste and cuttings from your premises on payment of tax; if you're not, the principal does it (Section 143(5)).
The principal files ITC-04
Half-yearly by 25 October and 25 April if its turnover exceeds Rs 5 crore, otherwise yearly by 25 April (Rule 45(3)). You don't file ITC-04 as a job worker.
Source: CGST Act Sections 2(68) and 143; CGST Rules 45 and 55; Notification 15/2025-CT(R)
If you send goods out yourself, say for dyeing after embroidery, you become the principal for that lot. Our job work GST guide covers the principal's side, and our dyeing and printing units guide explains how those units bill you.
Income tax for embroidery and zari units
TDS on what customers pay you. Embroidery on a customer's goods is "work" under a contract. When your customer is a company, firm, co-operative or other designated person, it deducts TDS under Section 194C of the 1961 Act for FY 2025-26, and under Section 393(1), Table Sl. No. 6(i) of the 2025 Act from 1 April 2026. The rate is 1% if you're an individual or HUF and 2% otherwise, once one bill exceeds Rs 30,000 or the year's payments exceed Rs 1,00,000. Check Form 26AS and claim that TDS in your return.
When it isn't "work". Section 402(47) of the 2025 Act excludes making a product to a customer's specification "by using material purchased from a person, other than such customer". So if you buy your own fabric and sell embroidered panels to a brand's design, that's a sale of goods, not a works contract, and contractor TDS doesn't apply. A large buyer may instead deduct 0.1% on purchases above Rs 50 lakh in a year (Section 194Q of the 1961 Act; Section 393(1), Table Sl. No. 8(ii) of the 2025 Act).
TDS you deduct from karigars. If your unit is a company or firm, or a proprietor or HUF whose business turnover exceeded Rs 1 crore in the previous year (Section 402(11)(l) of the 2025 Act), the same Sl. No. 6(i) applies when you pay outside karigars or sub-contractors. Say an unregistered aari contractor bills your firm Rs 45,000 for one lot: you pay Rs 44,550 and deposit Rs 450 as TDS. Our Section 194C guide covers the rules, and our TDS filing service files the quarterly returns.
Cash wages. Piece-rate karigars are often paid in cash at the end of the week. Under Section 36(4) of the 2025 Act, an expense paid to one person in cash above Rs 10,000 in a day isn't deductible. Pay by bank transfer or UPI and keep a piece-rate wage register. A floor with many workers also needs PF and ESI handled properly; our payroll management service runs it.
Section 44AD. For FY 2025-26, a resident individual, HUF or partnership firm (not an LLP) can declare 6% of turnover received by bank transfer, UPI or account payee cheque, and 8% of the rest, under Section 44AD of the 1961 Act. The limit is Rs 2 crore, or Rs 3 crore if cash receipts don't exceed 5% of turnover. From 1 April 2026 it's Section 58(2), Table Sl. No. 1 of the 2025 Act. A unit with Rs 60,00,000 of job work receipts, Rs 50,00,000 by bank and Rs 10,00,000 in cash, declares at least Rs 3,80,000 (6% of Rs 50 lakh is Rs 3,00,000, plus 8% of Rs 10 lakh is Rs 80,000). Our Section 44AD guide explains the five-year lock-out if you opt out.
Tax audit. Accounts must be audited if turnover exceeds Rs 1 crore, or Rs 10 crore where cash receipts and cash payments each stay within 5% (Section 44AB of the 1961 Act; Section 63(1) of the 2025 Act).
Comparison
Embroidery Job Worker vs Unit Selling Its Own Goods
| Parameter | Work on customers' goods | Selling own laces, borders or zari |
|---|---|---|
| What you supply | Service (heading 9988) | Goods (5605, 5809, 5810) |
| GST rate | 5% for a registered owner; 18% is the safer rate for an unregistered one | 5% |
| Registration limit | Rs 20 lakh (Rs 10 lakh in special category States) | Rs 40 lakh where allowed, Rs 20 lakh in Telangana; any inter-State sale |
| TDS on your receipts | 1% or 2%: Section 194C / 393(1) Sl. No. 6(i) | 0.1% above Rs 50 lakh from a large buyer: Section 194Q / 393(1) Sl. No. 8(ii) |
| ITC-04 | Filed by the principal, not you | You file it if you send goods out |
Source: CGST Act Sections 2(68), 22, 24, 143; Notifications 9/2025, 11/2017, 15/2025-CT(R) and 10/2019-CT; Income-tax Act 1961 Sections 194C, 194Q; Income-tax Act 2025 Sections 393 and 402
Common mistakes embroidery and zari units make
- Billing every customer at 5%. The 5% job work rate needs a registered owner. Check the GSTIN on the portal before you quote.
- Waiting for Rs 40 lakh before registering. One job work order makes you a service supplier, and the limit drops to Rs 20 lakh.
- Expecting a refund of credit on polyester film. Imitation zari thread is on the barred list in Notification 5/2017-CT(R). Plan for that credit to sit in the ledger.
- Assuming the embroidery machine is 5% like a sewing machine. Heading 8447 is 18%. Budget for it, and register before you buy so you can take the credit.
- Charging GST on the value of the customer's sarees. On job work you charge GST on your work charges only.
- Paying karigars more than Rs 10,000 a day in cash. That expense loses the deduction.
How Tax Garden helps embroidery and zari units
We register your unit, set up billing that picks 5% or 18% based on the customer's GSTIN, keep your lot registers and challans in order, and file GSTR-1 and GSTR-3B through our GST return filing service. On the income tax side, we track TDS deducted by your customers, deduct and file TDS on karigar payments and file your return through our ITR filing service, with books kept by our accounting and bookkeeping service. Call or WhatsApp us on 9640290977.
Related reading: Tailors and boutiques guide | Garment and hosiery units guide | Handloom weavers guide | Textiles GST rate guide
