CBIC Clarification: GST Rate on Imitation Zari Thread or Yarn Demystified
The 52nd meeting of the GST Council on October 7, 2023, issued a circular to clarify the GST rate on imitation Zari thread.
For the real Zari thread, which falls under Schedule III, the GST rate is 12%. However, imitations of Zari thread, sold under different brand names with various compositions, fall under Schedule I and attract a 5% GST rate.
The Harmonised System Nomenclature (HSN) is a global classification system for goods. The HSN code for real Zari thread (gold and silver combined with textile thread) is *56050010, while the code for imitation Zari thread is 56050020.
Real Zari is made from fine silver or gold threads drawn from alloys, flattened through rollers, and wound on a silk base yarn. On the other hand, imitation Zari is made by drawing copper wires from copper alloys, electroplating them with silver, and winding them around a base yarn.
It’s important to note that any method of making Zari that is not real falls under the category of imitation Zari. The GST Council emphasizes that no refunds will be given for any imitation Zari due to a difference in tax rates.
If there are any challenges in implementing this circular, it is advised to bring them to the notice of the Board.
