Looking for expert help with Textile dyeing GST rate and SAC 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
- Dyeing, printing and processing of textiles (Chapters 50 to 63) as job work is 5% GST under SAC heading 9988 (Notification 11/2017-CT(R), S. No. 26(ii)(g), as substituted by 15/2025-CT(R)).
- Job work needs a registered fabric owner (Section 2(68), CGST Act). Processing for an unregistered owner is 18% (S. No. 26(vii)).
- Dyes (3204) and textile finishing agents (3809) are 18%, so most job-work houses build up credit. The inverted duty refund under Section 54(3)(ii) is open to them.
- Job workers register above Rs 20 lakh, not Rs 40 lakh, because job work is a service (Section 22(1)).
- Customers deduct 1% or 2% TDS on processing charges above Rs 30,000 a bill or Rs 1 lakh a year (Section 194C; Section 393(1) Sl. No. 6(i) of the 2025 Act).
What is the GST rate on textile dyeing and printing job work? Dyeing, printing, bleaching or finishing fabric or yarn 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. The same work on goods of an unregistered owner is 18%.
A process house in Surat, Tiruppur, Erode, Bhiwandi or Pochampally rarely owns the cloth it works on. A trader or weaver sends grey fabric, the unit bleaches, dyes, prints or finishes it, and the cloth goes back with a bill for processing charges. Some units also buy grey fabric, process it and sell the finished cloth themselves. Those two models carry different GST rates, different registration limits and very different refund positions. This post covers GST rates, registration, the inverted duty refund, job work paperwork 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 for owners of dyeing, printing and processing units and the accountants who file for them.
What GST rate applies to dyeing, printing and your inputs?
The rate turns on who owns the cloth. Notification 15/2025-Central Tax (Rate) rewrote S. No. 26 of Notification 11/2017-CT(R) from 22 September 2025, and textile job work stayed at 5%.
Tax Rate Chart
GST for Textile Processing Units (from 22 September 2025)
Job work on textiles of Chapters 50 to 63 for a registered owner (9988)
11/2017-CT(R) S. No. 26(ii)(g)
Treatment or process on goods of an unregistered owner
11/2017-CT(R) S. No. 26(vii)
Sale of your own woven cotton fabric (5208 to 5212)
9/2025-CT(R) Sch I, S. No. 334
Sale of your own woven man-made fabric (5407, 5408, 5512 to 5516)
9/2025-CT(R) Sch I, S. Nos. 342, 348
Sale of your own knitted or crocheted fabric (Chapter 60)
9/2025-CT(R) Sch I, S. No. 387
Synthetic organic dyes and preparations (3204)
9/2025-CT(R) Sch II, S. No. 46
Finishing agents, dye carriers, mordants (3809)
9/2025-CT(R) Sch II, S. No. 96
Source: CBIC Notifications 11/2017-CT(R) as substituted by 15/2025-CT(R), and 9/2025-CT(R), in force 22 September 2025; CT(R) list checked up to 01/2026-CT(R)
Registered owner, 5%. Section 2(68) of the CGST Act defines job work as "any treatment or process undertaken by a person on goods belonging to another registered person". Bleaching, dyeing, printing, mercerising, finishing and washing of fabric or yarn for a registered trader or weaver all sit in item (ii)(g), which covers "Textiles and textile products falling under Chapters 50 to 63". You charge GST only on your processing charges, not on the value of the cloth.
Unregistered owner, 18%. Say a boutique owner without GST sends 200 metres for block printing and your charge is Rs 30,000. That isn't job work under Section 2(68), so it falls in item (vii), "any treatment or process on goods belonging to another person", at 9% CGST plus 9% SGST. The bill is Rs 30,000 plus Rs 5,400 GST. Ask every customer for a GSTIN before you quote, and keep a copy.
Your own cloth, goods rate. If you buy grey fabric, process it and sell the finished cloth, you're selling goods, not a service. Woven cotton, woven man-made fibre and knitted fabrics are all 5% in Schedule I of Notification 9/2025-CT(R). Our textiles GST rate guide lists yarn and garment rates, and our job work GST guide covers job work outside textiles.
Do you need GST registration, and at what limit?
Job workers use Rs 20 lakh. The Rs 40 lakh option in Section 22(1) applies only to a supplier "engaged exclusively in the supply of goods". A process house doing job work supplies a service, so it registers once aggregate turnover crosses Rs 20 lakh in a financial year, or Rs 10 lakh in special category States under the first proviso.
Goods-only units. A unit that only sells its own processed fabric can use 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. Section 24 makes registration compulsory for anyone making inter-State supplies of goods, whatever the turnover. Our registration limit guide has the detail, and our GST registration service files the application for you.
Composition rarely fits. Section 10(2)(a) bars suppliers of services (other than restaurant service) from the Section 10(1) composition scheme. A mainly job-work house can't use it. Even a goods-only unit should think twice: a composition taxpayer can't take any input tax credit (Section 10(4)), so the 18% on dyes becomes a straight cost.
The inverted duty refund on dyes and chemicals
Here's what most processing houses miss. Your output is taxed at 5% and your dyes, chemicals and auxiliaries at 18%. Credit piles up in the electronic credit ledger month after month. Section 54(3)(ii) of the CGST Act allows a refund where "the rate of tax on inputs" is higher than the rate on output supplies, unless the supply is notified as barred. For services, the only barred supply is under Notification 15/2017-Central Tax (Rate), which after its 2023 amendment covers just the sale of under-construction real estate. Textile job work isn't barred.
The formula. Rule 89(5) of the CGST Rules sets the maximum refund:
(Turnover of inverted rated supply x Net ITC / Adjusted Total Turnover) minus (Tax payable on that inverted rated supply x Net ITC / ITC availed on inputs and input services)
"Net ITC" means credit on inputs only. Credit on input services, such as freight or machine repairs, and on capital goods, such as a new jet dyeing machine, stays in the ledger.
Example: a registered job-work dyeing house in one month bills Rs 10,00,000 of processing charges at 5%. It buys dyes and chemicals worth Rs 4,00,000 at 18% and pays Rs 8,000 GST on input services. All its turnover is job work.
| Item | Amount |
|---|---|
| Output tax (5% of Rs 10,00,000) | Rs 50,000 |
| ITC on dyes and chemicals (Net ITC) | Rs 72,000 |
| ITC on input services | Rs 8,000 |
| Total ITC availed | Rs 80,000 |
| First part: Rs 10,00,000 x Rs 72,000 / Rs 10,00,000 | Rs 72,000 |
| Second part: Rs 50,000 x Rs 72,000 / Rs 80,000 | Rs 45,000 |
| Maximum refund under Rule 89(5) | Rs 27,000 |
| Left in the ledger (input services share) | Rs 3,000 |
Time limit. File Form GST RFD-01 within two years from the relevant date, which for an inverted duty claim is the due date of the GSTR-3B for the period in which the claim arises (Section 54(1) and Explanation 2(e)). Many units file quarterly or yearly. Our inverted duty refund guide walks through the RFD-01 steps.
Selling your own fabric. Notification 5/2017-CT(R) once barred inverted refunds on woven and knitted fabrics. Notification 20/2018-CT(R) lifted that from 1 August 2018, but it lapsed the credit balance left on 31 July 2018. A unit selling its own processed fabric can claim the refund on dyes and chemicals today, under the same Rule 89(5) formula.
Job work paperwork: challans, the one-year rule and e-way bills
Step-by-Step Guide
Job Work Cycle for a Textile Processing House
Principal sends the grey fabric
The registered owner sends the cloth without tax under a delivery challan (Rule 55, CGST Rules). Check the challan's quantity against what arrives, and note any shortage on it.
E-way bill for the movement
For an inter-State consignment from principal to job worker, the principal or the registered job worker generates the e-way bill at any value (Rule 138(1), proviso).
Process and return within one year
Inputs must come back to the principal, or be supplied from your premises, within one year of being sent (Section 143(1)). If not, they're treated as supplied by the principal on the day they were sent (Section 143(3)).
Bill your processing charges
Issue a tax invoice for the charges only, at 5% if the owner is registered. Quote the owner's GSTIN on the invoice.
Principal files ITC-04
The principal reports goods sent and received in ITC-04: half-yearly if annual turnover exceeds Rs 5 crore, otherwise yearly, by the 25th of the following month (Rule 45(3)).
Source: CGST Act Sections 2(68), 19 and 143; CGST Rules 45, 55 and 138
Who claims credit on the cloth. Under Section 19, the principal takes credit on grey fabric sent to you, even if the supplier ships it straight to your unit. Your own credit covers only what you buy: dyes, chemicals, fuel, packing, machinery and services. Keep the two apart in your stock register. Our e-way bill guide covers the portal steps for job work movements.
E-invoicing. If your aggregate turnover in any financial year since 2017-18 crossed Rs 5 crore, your B2B invoices must be e-invoices (Notification 10/2023-Central Tax). Our e-invoicing guide explains the IRN process.
Income tax for dyeing and printing units
TDS on your charges. Processing someone else's cloth is "work" under a contract. Under Section 194C of the 1961 Act for FY 2025-26, and Section 393(1), Table Sl. No. 6(i) of the 2025 Act from 1 April 2026, your customer deducts 1% if you're an individual or HUF and 2% if you're a firm or company. TDS applies when one bill exceeds Rs 30,000 or the year's total exceeds Rs 1,00,000. Under the 2025 Act, the deductor is a "designated person": government, companies, firms, co-operatives, trusts and societies, and individuals or HUFs whose business turnover exceeded Rs 1 crore in the previous year (Section 402(11)). A proprietor job worker billing a company Rs 40,000 for one lot gets Rs 39,600 and Rs 400 of TDS credit. Match it with your Form 26AS before you file. Our Section 194C guide covers the rules, and our TDS filing service handles the returns if you pay contractors yourself.
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 by the return due date, and 8% of the rest, under Section 44AD of the 1961 Act. The limit is Rs 2 crore of turnover, 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.
Example: a proprietor's processing charges for FY 2025-26 are Rs 1,50,00,000, all received by bank transfer. Deemed profit is 6% of Rs 1,50,00,000, so Rs 9,00,000. A dyeing house with high fuel, dye and wage bills may earn less than that. If your books show a lower profit, you can declare it instead, but you'll need books and a tax audit. Our Section 44AD guide explains the five-year lock-out if you opt out.
Tax audit. A business must get its accounts 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). It also applies if you were in presumptive taxation and declare less than the deemed profit.
Late payment by your customers. If your unit is a micro or small enterprise registered on Udyam, a customer who pays you later than the time limit in Section 15 of the MSMED Act, 2006 loses the deduction for that bill until the year it's paid (Section 43B(h) of the 1961 Act; Section 37(2)(g) of the 2025 Act). It's worth telling your larger customers you're registered. Our Section 43B(h) guide covers how it works.
Comparison
Job Work House vs Fabric Seller: Quick Comparison
| Parameter | Job work for registered owners | Selling your own processed fabric |
|---|---|---|
| What you supply | Service (heading 9988) | Goods (Chapters 52, 54, 55, 60) |
| GST rate | 5% | 5% |
| Registration limit | Rs 20 lakh (Rs 10 lakh in special category States) | Rs 40 lakh where allowed; any inter-State sale |
| Inverted refund on dyes | Allowed, Rule 89(5) | Allowed since 1 August 2018 |
| TDS on your receipts | 1% or 2%: Section 194C / 393(1) Sl. No. 6(i) | 0.1% above Rs 50 lakh from a buyer with turnover over Rs 10 crore: Section 194Q / 393(1) Sl. No. 8(ii) |
| ITC-04 | Filed by your principal | Not applicable |
Source: CGST Act Sections 2(68), 22, 54; Notifications 11/2017, 15/2025, 9/2025, 5/2017 and 20/2018-CT(R); Income-tax Act 1961 Sections 194C, 194Q; Income-tax Act 2025 Sections 393 and 402
Common mistakes processing units make
- Charging 5% to an unregistered customer. Job work needs a registered owner. A boutique or retail customer without GSTIN is billed at 18%.
- Waiting for Rs 40 lakh to register. That limit is for goods-only suppliers. A job-work house registers above Rs 20 lakh.
- Letting dye credit sit in the ledger. The refund under Section 54(3)(ii) has a two-year window per period. Unclaimed months drop off.
- Including input services in Net ITC. Rule 89(5) counts inputs only. Freight and repair credit isn't refunded.
- Mixing the principal's cloth into your stock. Fabric received on challan isn't your purchase. Keep a separate job work register, so shortages and the one-year limit are easy to track.
- Ignoring TDS in Form 26AS. Customers who forget to file their TDS returns leave you without credit. Check before you file your ITR.
How Tax Garden helps dyeing and printing units
We register your processing house, set up separate billing for registered (5%) and unregistered (18%) customers, keep your job work register and e-way bills in order, and file GSTR-1 and GSTR-3B through our GST return filing service. We work out your Rule 89(5) refund on dyes and chemicals and file the RFD-01. On the income tax side, we reconcile TDS from your customers 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: Spinning mills guide | Handloom weavers guide | Silk reeling units guide | Tailors and boutiques guide
