GST on bags 2025 — Panic or Perspective?

A simple, no-jargon explainer for Indian bag makers.

GST on bags 2025 - what changed, what to claim, and why faster collections = less pain.

Fabric, zips and sliders are now at 5% GST. Most finished bags stay at 18%. What does that mean for day-to-day business?

What changed

• Coated fabrics: 5%

• Zippers & sliders: 5%

• Webbing/tapes: 5%

• Plastic fittings/buckles: 18%

• Finished bags: 18%

That’s the whole picture. Inputs down to 5% (mostly), output still 18%.

Why everyone is worried

People hear “inputs 5%, output 18%” and think the gap is 13%. It sounds scary. But that headline number doesn’t reflect a real bill of materials.

• You still buy some items/services at 18% (plastic fittings, job-work, courier/freight under forward charge, packaging, software, repairs).

• Those 18% credits reduce the gap.

• So the increase is real but smaller than 13% for most manufacturers.

The impact in plain terms

• Profitability (B2B): GST is a pass-through. Your ex-GST margins don’t automatically change.

• Cash flow: You’ll pay less GST upfront on fabric/zips (good), but you’ll claim less ITC, so your monthly GST payable at filing goes up (that’s where it pinches if receivables are slow).

A quick, no-stress example

Say you sell a bag at ₹1,000 (ex-GST). Earlier you might have claimed about ₹100–₹120 input credit. Now, with many inputs at 5% (and some still at 18%), your credit might be around ₹80–₹95.

Extra GST outgo: roughly ₹30–₹40 per ₹1,000 of sales, not ₹130.

(Every factory’s mix is different, but this gives the feel.)

Simple thumb rules

• More plastics & paid services (18%) → smaller rise in your monthly payable.

• More fabric/webbing (5%) → bigger rise.

• Fast collections → less pain on filing day.

• Capture every 18% credit → job-work, freight (forward charge), packaging, consumables, software, spares.

• Clean cut-over → update rate masters; keep POs/invoices aligned with the new rates.

What you can do this week

1. Check one hero SKU: Write your material split on a paper (fabric, zips, sliders, webbing, plastics, services). You’ll see why your gap isn’t 13%.

2. Tighten receivables: Try to collect within the GST cycle; even small advances help.

3. Train the team: Purchase, accounts and dispatch should work on the new 5% inputs / 18% output from Day 1.

4. Talk to customers: For B2B, keep ex-GST prices steady; reassure them invoices are updated.

Over to you

This change looks big on paper, but the real-world impact depends on your inputs and your cash cycle. Some will feel a pinch at filing; others will barely notice after tightening collections and credits.

What do you think? Will the lower input GST and cleaner credits help the ecosystem, or will the higher monthly payable squeeze manufacturers?

Share your view—let’s learn from each other.