This is the reference detail behind our Handloom Weaving and Textiles page: GST, , the 45-day payment rule and co-operative societies.
Tamil Nadu's handloom trade runs through master weavers, independent weavers, co-operative societies and showrooms. Margins depend on silk and zari prices that move with the market, on work given out on piece rates, and on long credit through the festival and wedding seasons.
GST after the 2025 rate changes
From 22 September 2025, most of the handloom chain moved to 5%: yarn, zari, fabric and job work.
| Item | GST |
|---|---|
| Silk, cotton and man-made yarn | 5% |
| Zari: real, imitation and metallised yarn | 5% |
| Woven silk and cotton fabric, which is how sarees are generally classified | 5% |
| Garments and made-ups up to ₹2,500 a piece | 5% |
| Garments and made-ups above ₹2,500 a piece | 18% |
| Job work on textiles, such as weaving with someone else's yarn | 5% |
| Raw silk and silk cocoons; khadi fabric sold through KVIC (Khadi and Village Industries Commission) outlets | Exempt |
Until 2025, weavers of silk and cotton cloth often built up credit because yarn was taxed at a higher rate than cloth. With yarn, zari and cloth now all at 5%, that is much less common, though it can still happen where dyes, chemicals or packing are bought at 18%.
Registration. The turnover limits in Tamil Nadu are in the table below. A weaver doing job work is supplying a service, so the lower limit applies.
| Case | Turnover limit |
|---|---|
| Registration for a business selling only goods | Once turnover passes ₹40 lakh |
| Registration for a weaver doing job work, which is a service | Once turnover passes ₹20 lakh |
| Composition scheme for goods | Open up to ₹1.5 crore |
Selling through an online marketplace needs registration, except for small sellers within the State, who can enrol instead.
TDS on weavers and purchases
| Payment | TDS |
|---|---|
| Weaving charges to weavers who use yarn you supplied | 1% to individuals and HUFs (Hindu undivided families), 2% to others, once a single payment passes ₹30,000 or the year's total passes ₹1 lakh (Section 393(1), earlier 194C) |
| Purchases of goods, where your own turnover last year was over ₹10 crore | 0.1% of purchases from a supplier above ₹50 lakh in the year (Section 393(1), earlier 194Q) |
Weaving to your order using yarn you supplied counts as “work” for TDS. Buying finished sarees from a weaver who used their own yarn is a purchase of goods, not work. The TDS & TCS Checker works out the rate and dates for a payment.
Paying weavers on time: the 45-day rule
Many weavers and small units are registered on as micro enterprises. A buyer has to pay them within the agreed period, and never more than 45 days after acceptance, or within 15 days where nothing was agreed in writing.
An amount owed to a micro or small supplier and paid late is allowed as an expense only in the year it is actually paid (Section 37(2)(g), earlier ). A year-end payable to weavers can move your profit from one year to the next. Suppliers registered only as traders are outside this rule. The MSME Payment Checker works out the dates and the year for each invoice. The article on the MSME 45-day payment rule explains the rule in full.
Weavers' co-operative societies
A co-operative society engaged in a cottage industry such as handloom weaving can deduct the whole of its profit from that activity in computing its income (Section 149 of the Income-tax Act, 2025, earlier 80P). The society still keeps accounts, has them audited under the co-operative law and files its return.
Before relying on this article
The law this article follows: GST as amended from 22 September 2025, the Income-tax Act, 2025 and the , 2006.
Rates and limits change with each Finance Act and GST notification.
This article is a summary for planning, not advice for a particular business. GST classification in particular turns on the product: the fibre, how it is made and how it is sold.
