GST on Shoes: Rates, HSN Code, Registration & ITC

The footwear industry in India has undergone significant changes under the Goods and Services Tax (GST) regime. From large-scale manufacturers to local artisans and online sellers, GST impacts every stakeholder in terms of pricing strategy, compliance requirements, and input tax credit (ITC) claims.

With evolving policies and the removal of earlier exemptions, especially for handmade or custom footwear, understanding GST implications has become crucial for businesses in this sector.

GST Rates on Footwear

Footwear priced up to ₹1,000 attracts 12% GST, while any footwear priced above ₹1,000 is taxed at 18%. This dual rate structure is designed to make basic footwear more affordable for the general population, while luxury or high-end shoes fall under the higher slab.

Handmade footwear, especially under HSN codes 6403 and 6405, was earlier exempt or taxed at lower rates depending on the material and type.

However, from 1st January 2022, the GST rate for all footwear priced below ₹1,000 was increased to 12% (6% CGST + 6% SGST), making affordable footwear more expensive. Handmade footwear no longer enjoys a lower slab unless specifically exempted.

GST Registration for Footwear

GST registration becomes mandatory once your annual turnover crosses ₹40 lakh (₹20 lakh in special category states).

1. Steps for GST Registration

1. Go to www.gst.gov.in and click on ‘Register Now’ under the Registration tab.
2. Select Taxpayer, choose your state and district, and fill in your business name, PAN, mobile number, and email.
3. Verify contact details using OTP to generate a Temporary Reference Number (TRN).
4. Log in using the TRN to fill Part B of the application within 15 days.
5. Enter business details, promoter info, authorised signatory, and place of business.
6. Upload required documents like address proof, PAN, Aadhaar, and photographs.
7. Complete Aadhaar authentication and application verification using DSC, e-Sign, or EVC.
8. On submission, an ARN (Application Reference Number) is generated.
9. Once approved, your GSTIN and registration certificate will be issued.

Why GST Registration is Necessary?

• GST registration ensures your business complies with tax laws and avoids legal penalties.
• It allows you to claim ITC on raw materials, packaging, logistics, and other related services.
• Registered businesses can supply goods across states without restrictions.
• It adds to your business’s credibility and builds trust among vendors, suppliers, and customers.

GST Return Filing for Footwear

Filing GST returns is mandatory for all registered footwear businesses. It ensures tax compliance, helps you avoid penalties, and is essential for claiming input tax credit (ITC) on raw materials, packaging, and logistics.

1. Key GST Returns for Footwear Businesses

• GSTR-1: Monthly/quarterly return for outward supplies (sales).
• GSTR-3B: Monthly/quarterly self-declared summary return for tax payment and ITC claims.
• GSTR-9: Annual return consolidating all monthly/quarterly filings.
• GSTR-2B: Auto-drafted ITC statement that reflects eligible and ineligible ITC based on your supplier’s returns.

2. Tips for Easy GST Filing

• Maintained accurate purchase and sales records with HSN codes.
• Classify footwear items correctly under HSN codes to avoid mismatches and notices during return filing.
• File returns on or before the due date to avoid interest or late fees.
• Use accounting software or consult a GST professional for error-free filing.

Eligibility for Claiming GST Input Tax Credit

As a GST-registered footwear business, you can claim ITC on purchases used for business activities, such as raw materials, packaging, transport, and warehousing. To claim ITC, you must have a valid tax invoice, and the supplier must have filed their returns correctly. The goods or services must be used for taxable business operations, and the GST paid should not be under the composition scheme.

1. Who Can Claim ITC

• Businesses registered under GST.
• Purchases must be used for business purposes (not personal use).
• Tax invoice must contain the supplier’s and recipient’s GSTIN, HSN code, and tax amount.
• Supplier must have filed a GSTR-1, and the invoice must appear in your GSTR-2B.

2. Ineligible Claims for ITC

• Purchases used for personal consumption.
• Invoices older than the time limit (currently 30th November of the following financial year).
• GST paid under the composition scheme.
• Goods lost, stolen, or disposed of as gifts or free samples.

HSN Codes for Footwear Under GST

Harmonised System of Nomenclature (HSN) codes are important because they standardise the classification of goods, which helps in identifying the correct GST rate for each product. The accurate use of HSN codes ensures proper tax calculation and smooth processing of GST returns.

Key HSN Codes for Footwear

When is GST Payable for Footwear?

1. When GST Becomes Payable

GST on shoes is payable when you supply the goods. In most cases, this means either the date you issue the invoice or the date you receive payment—whichever happens first. This rule helps decide exactly when your GST liability starts.

Special Cases:

• E-commerce sales: GST is payable at the time of supply, just like in regular offline sales. However, if you sell through an e-commerce platform, the operator is also required to collect tax at the source (TCS) on your behalf and deposit it with the government.
• Import transactions: When you import footwear, GST becomes payable at the time of customs clearance. You’ll need to pay this, along with any applicable customs duties.

2. Importance of Timely GST Payment

• Ensures full compliance with GST laws and protects your business from interest, penalties, and legal action.
• Keeps your financial records transparent by reflecting accurate tax liabilities.
• Reduces the risk of audit complications by maintaining a clear and timely GST payment history.

Conclusion

Understanding GST for shoes is essential for pricing, compliance, and profitability. Most footwear items attract 12% or 18% GST based on their value and type. Accurate HSN code usage and timely GST return filing help you claim input tax credit and avoid penalties. Registering under GST not only ensures legal compliance but also builds trust with suppliers and customers. As a footwear seller, staying GST-compliant protects your business from tax disputes and enables smoother operations across retail and e-commerce channels.

Frequently Asked Questions (FAQs):

1. Are handmade or custom-made footwear subject to GST?

Yes, handmade or custom-made footwear is subject to GST. Earlier exempt or taxed at 5%, such footwear now attracts 12% or 18% GST based on price, following the rate revision effective 1st January 2022.

2. What are the HSN codes for different types of footwear?

HSN codes for footwear fall under Chapter 64. Common codes include 6401 (waterproof footwear), 6402 (rubber/plastic footwear), 6403 (leather uppers), 6404 (textile uppers), 6405 (other footwear), and 6406 (footwear parts).

3. How does GST impact the pricing of footwear for consumers?

GST directly affects the retail price. Footwear priced above ₹1,000 attracts 18% GST, which increases the end cost to consumers. Even low-cost footwear became costlier after the GST hike from 5% to 12% in January 2022.

4. How does GST impact the footwear industry?

GST has streamlined tax compliance but increased costs for some segments. It offers benefits like input tax credit and uniform taxation but demands accurate HSN classification and timely return filing to avoid penalties.

5. Does GST on footwear vary for local brands vs. imported brands?

No, GST rates are the same for both local and imported footwear. However, imported shoes may attract additional customs duties and IGST at the applicable rate.

6. Can small businesses selling footwear claim GST exemptions?

Gst registration for small businesses with a turnover below ₹40 lakh (₹20 lakh in special category states) is not compulsory. However, once registered, they cannot claim exemption and must comply fully, including charging GST.

7. How do online footwear sellers handle GST compliance?

Online sellers must register for GST regardless of turnover. They need to upload invoices with correct HSN codes, file monthly returns, and reconcile sales data with e-commerce platforms to claim ITC and avoid mismatches.

8. Can I claim ITC on footwear purchases for my business?

Yes, if you are GST-registered, and the footwear is used for business purposes, you can claim ITC. Ensure you have valid tax invoices and that the supplier has filed their returns correctly.