This is the reference detail behind our Leather and Footwear page: GST, and , cost records, paying small suppliers and export credits.
Ranipet, Vellore, Ambur and Vaniyambadi tan hides, finish leather and make footwear, much of it for export. Profit depends on how much saleable leather each hide gives, on work passed between tanneries and footwear units, and on money that comes back months after it goes out.
GST after the 2025 rate changes
From 22 September 2025, finished leather and footwear up to ₹2,500 a pair moved from 12% to 5%.
| Item | GST |
|---|---|
| Finished leather (headings 4107 and 4112 to 4115) | 5%, down from 12% |
| Footwear sold at up to ₹2,500 a pair | 5%, down from 12% |
| Footwear sold above ₹2,500 a pair | 18% |
| Job work on hides, skins and leather, and on making leather goods or footwear | 5% |
| Other job work | 18% |
The rate on footwear follows the sale value of each pair, so the same article can fall on either side of the line depending on its price. Rates on leather goods such as bags, belts and wallets vary by product, and need checking against the tariff heading.
Exports are zero-rated: the exporter either ships without charging tax under a letter of undertaking and claims a refund of input tax, or pays tax and claims it back. Which route leaves less money locked up depends on the credits the unit carries.
TDS and TCS on common payments
| Payment | Tax at source |
|---|---|
| Job-work charges for tanning, finishing or stitching on material you supplied | TDS of 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 | TDS of 0.1% of purchases from a supplier above ₹50 lakh in the year (Section 393(1), earlier 194Q) |
| Sale of scrap | TCS of 2% collected from the buyer (Section 394), unless the buyer gives a declaration in Form 127 that it is for use in manufacture |
Whether trimmings and shavings are “scrap” for TCS depends on whether they can be used as such, so it needs checking for each kind of waste. The TDS & TCS Checker works out the rate and dates for a payment or sale.
Cost records and cost audit
Leather, leather goods and footwear are not among the industries listed in the Companies (Cost Records and Audit) Rules, 2014, so the rules do not require cost records or a cost audit for them. A company that also makes a listed product, such as rubber or plastic items under the listed tariff headings, is covered for that product. The Cost Audit Applicability Checker works through the tests.
The costing itself is useful with or without the rule: it is what yield control, job-work rates and export pricing rest on.
Paying small suppliers and job workers
Many job workers and small suppliers are registered on as micro or small enterprises. They have to be paid within the agreed period, and never more than 45 days after acceptance, or within 15 days where nothing was agreed in writing. An amount paid late is allowed as an expense only in the year it is actually paid (Section 37(2)(g), earlier ). The MSME Payment Checker works out the dates for each invoice. The article on the MSME 45-day payment rule explains the rule in full.
Export credits
Exporters can claim duty drawback and credit under the RoDTEP (Remission of Duties and Taxes on Exported Products) scheme. Both are income of the order and belong in its costing. The scheme has been extended in stages by notification, so check that it is running, and at what rate, when you quote.
Before relying on this article
The law this article follows: GST as amended from 22 September 2025, the Income-tax Act, 2025, the , 2006 and the Companies (Cost Records and Audit) Rules, 2014.
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 rates in particular depend on the tariff heading of each product and, for footwear, on its sale value.
