Service Tax on Tailoring Activity, Service Tax

[Prakash Gupta]

Dear All,

I have following queries on tailoring activity :

1. In case where fabric is supplied and stitched by the tailor, whether this activity is manufacturing or service ? In whatever applicable case what would be the rate of the Tax ?

2. What would be the tax applicability in case case where fabric is supplied by the customer and stitched by the tailor?

Thanks,

Best,

Pankaj Singh

Posts / Replies

[KASTURI SETHI]

See reply to Issue ID No.11267 posted by Sh.C.S.Sanjay Malhotra, an authority on GST and all indirect taxes.

[KASTURI SETHI]

Prior to 1.7.17 stitching of clothes was out of Service Tax net as per Board's Circular. Extract of Board's Circular is appended below:-

F. No. B11/1/2002-TRU, dated 1-8-2002

4. A point has been raised as to whether tailors and jewellers will be covered under the service tax. Taxable service in this case is designing of goods intended to be worn by human being. A tailor is involved only in stitching of clothes. As such no designing activity is involved. Hence tailor will not be covered under the tax net. Similarly jeweller essentially makes jewellery and sells it. Therefore, no designing is involved. However a jeweller may avail services of a designer to design jewellery. Service provided by designer to jeweller would be covered under the tax net in the category of fashion designing.

Now this activity is not covered under exemption list of services, 5%, 12 %, 28% . Unless and until clarification is received from the Board, in my view it is covered under 18% slab (Service not elsewhere specified). Other experts may throw light on the issue. We may hope such clarificatory circular.

 

[KASTURI SETHI]

Dear Querist,

With reference to your telephonic talk yesterday, you said that you were engaged in stitching bed sheet covers, pillow covers, curtains etc on job-work basis. GST @5% is leviable on goods below ₹ 1000/- and GST@12% is leviable on goods above ₹ 1000/-. If goods are branded, no threshold exemption is available. Your principal can pay GST depending upon the nature of agreement between you (job-worker) and principal ( jobbee).

I like to post my reply on this forum instead of on phone.