GST Rates for Rubber Footwear (HSN 6402) | [Year]

GST Rates and HSN Code for Rubber Footwear (HSN 6402) | [Year]

Navigating the complexities of Goods and Services Tax (GST) can be challenging, especially for businesses dealing with specific product categories. This article aims to provide a detailed understanding of the GST rates applicable to rubber footwear, classified under Harmonized System of Nomenclature (HSN) code 6402. We will delve into the specifics of the HSN code, current GST rates, potential exemptions, compliance requirements, and related considerations for manufacturers, retailers, and importers of rubber footwear in India. Understanding the GST rates for rubber footwear is crucial for accurate pricing, tax compliance, and ultimately, business profitability.

Understanding HSN Code 6402

The Harmonized System of Nomenclature (HSN) is a globally recognized system for classifying goods. It is used worldwide for customs tariffs, trade statistics, and origin rules. In India, HSN codes are used for GST purposes to determine the applicable tax rates for different goods. HSN code 6402 specifically covers "Other footwear with outer soles and uppers of rubber or plastics."

Within HSN 6402, there are several subheadings that further categorize rubber footwear based on specific characteristics. These subheadings are crucial for accurate classification and, potentially, different GST implications. Examples of subheadings under HSN 6402 include:

• 6402.12: Sports footwear
• 6402.19: Other footwear (not sports footwear)
• 6402.20: Footwear with outer soles and uppers of rubber or plastics, incorporating a protective metal toe-cap.
• 6402.91: Footwear covering the ankle
• 6402.99: Other footwear (not covering the ankle)

It's imperative to correctly identify the precise subheading to ensure accurate application of the GST rates for rubber footwear.

Current GST Rates for Rubber Footwear (HSN 6402)

The GST rate applicable to rubber footwear under HSN code 6402 has evolved over time. As of [Current Date], the applicable GST rate generally falls under two categories, as determined by the value of the footwear:

• 5% GST: Applicable to footwear with a value not exceeding INR 1,000 per pair.
• 12% GST: Applicable to footwear with a value exceeding INR 1,000 per pair.

This rate structure was established based on decisions made by the GST Council to promote affordability and support the domestic footwear industry. It is crucial to stay updated with any revisions or notifications issued by the Central Board of Indirect Taxes and Customs (CBIC) regarding GST rates.

Example: A pair of rubber slippers priced at INR 500 will attract a 5% GST rate. However, a pair of branded rubber boots priced at INR 1,200 will attract a 12% GST rate.

GST Rate Notifications and Circulars

Staying abreast of the latest GST notifications and circulars issued by the CBIC is crucial for compliance. These notifications often clarify ambiguities, introduce amendments, or provide specific guidance on the application of GST rates to various products, including rubber footwear. Key websites to monitor include the CBIC website (www.cbic.gov.in) and the GST portal (www.gst.gov.in).

These resources will contain information regarding:

• New notifications impacting HSN code 6402.
• Amendments to existing rates.
• Clarifications on specific product classifications.
• Instructions for claiming Input Tax Credit (ITC).

Input Tax Credit (ITC) and Rubber Footwear Manufacturing

Input Tax Credit (ITC) is a mechanism that allows businesses to reduce their GST liability by claiming credit for the GST paid on their inputs. For manufacturers of rubber footwear, this includes GST paid on raw materials (like rubber, plastics, adhesives), machinery, and other inputs used in the manufacturing process. Understanding and effectively utilizing ITC is crucial for optimizing cash flow and reducing the overall cost of production. However, there are specific rules and conditions for claiming ITC, including proper documentation and adherence to GST regulations.

Consider a rubber footwear manufacturer who purchases rubber sheets (a key raw material) and pays GST on the purchase. They can claim this GST as ITC when they sell the finished footwear and pay GST on those sales. This reduces their overall tax burden and contributes to their profitability. Remember to also check Carbon Electrodes GST Rates & HSN Code 8545 | Expert Guide for potentially applicable rules about inputs or processes that may be involved in the creation of your footwear manufacturing equipment.

Exemptions and Special Cases

While most rubber footwear is subject to GST, certain exemptions or special cases may apply. These exemptions typically target specific types of footwear or specific categories of manufacturers. For example, footwear manufactured by certain Khadi and Village Industries Commission (KVIC) units may be eligible for exemptions, as they align with government initiatives promoting small-scale and rural industries. It's vital to research and verify any potential exemptions based on the specific nature of your business and the type of footwear you are dealing with.

Furthermore, special cases may arise in situations involving composite supplies (where footwear is sold as part of a larger package) or mixed supplies (where footwear is sold alongside other unrelated items). In these cases, determining the correct GST rate requires careful analysis of the principal supply and the applicable rules for composite and mixed supplies.

Compliance Requirements for GST on Rubber Footwear

Businesses involved in the manufacturing, trading, or import/export of rubber footwear must comply with all applicable GST regulations. This includes:

• Registration: Obtaining GST registration if your aggregate turnover exceeds the prescribed threshold (currently INR 20 lakhs for most states and INR 10 lakhs for special category states, as per the GST Act). Don't forget to review our guide on FSSAI Registration: Your Complete Guide | [Year] as it will provide you insight on other compliance requirements to consider.
• Invoicing: Issuing GST-compliant invoices with accurate HSN codes, GST rates, and other mandatory details.
• Returns Filing: Filing regular GST returns (GSTR-1, GSTR-3B, etc.) within the prescribed deadlines. Failure to file returns on time can result in penalties and interest.
• Payment of GST: Paying GST on a monthly or quarterly basis, depending on your chosen scheme.
• Record Keeping: Maintaining accurate records of all transactions related to the purchase and sale of rubber footwear.

Non-compliance with GST regulations can lead to penalties, interest, and even legal action. Therefore, it's essential to stay informed about the latest rules and regulations and seek professional advice when needed.

Impact of GST on the Rubber Footwear Industry

The introduction of GST has had a significant impact on the rubber footwear industry in India. The unified tax structure has simplified inter-state trade and reduced the cascading effect of taxes. However, it has also brought challenges, such as the need for businesses to adapt to the new compliance requirements and understand the intricacies of the GST system.

According to a report by CRISIL, the organized sector of the footwear industry has benefited from GST, as it has leveled the playing field and made it more difficult for unorganized players to evade taxes. However, smaller manufacturers and traders may face challenges in complying with the complex GST regulations. The Ministry of Micro, Small & Medium Enterprises (MSME) has launched several initiatives to support small businesses in adapting to GST. Understanding Types of TDS in India: A Comprehensive Guide can further help with broader financial compliance considerations.

Future Trends and Potential Changes

The GST landscape is constantly evolving. The GST Council regularly reviews and amends GST rates and regulations based on economic conditions, industry feedback, and policy objectives. Potential future trends include:

• Further rationalization of GST rates: The government may consider further simplifying the GST rate structure by reducing the number of tax slabs.
• Enhanced technology integration: The GSTN (Goods and Services Tax Network) is continuously working on improving the GST portal and integrating new technologies to streamline compliance processes.
• Increased focus on compliance enforcement: The government is likely to intensify its efforts to detect and prevent GST evasion.

Businesses in the rubber footwear industry should proactively monitor these trends and adapt their strategies accordingly.

Practical Examples and Scenarios

Let's illustrate the application of GST on rubber footwear with a few practical examples:

Scenario 1: Retail Sale of Rubber Slippers

A retailer sells a pair of rubber slippers for INR 450. The applicable GST rate is 5%. The GST amount is INR 450 * 0.05 = INR 22.50. The total selling price, including GST, is INR 472.50.

Scenario 2: Wholesale Purchase of Rubber Boots

A wholesaler purchases 100 pairs of rubber boots from a manufacturer at a price of INR 1,100 per pair. The applicable GST rate is 12%. The GST amount is INR 1,100 * 0.12 = INR 132 per pair. The total cost, including GST, is INR 1,232 per pair.

Scenario 3: Import of Rubber Footwear

An importer imports 500 pairs of rubber sandals. The assessable value of the sandals is INR 800 per pair. The applicable GST rate is 5%. In addition to GST, the importer may also be liable to pay Basic Customs Duty (BCD) and Integrated Goods and Services Tax (IGST) at the applicable rates.

These examples demonstrate the practical application of GST rates and highlight the importance of accurate record-keeping and compliance.

Conclusion: Staying Compliant with GST on Rubber Footwear

Navigating the GST landscape for rubber footwear requires a thorough understanding of HSN codes, applicable rates, exemptions, and compliance requirements. By staying informed about the latest notifications and circulars, effectively utilizing Input Tax Credit, and seeking professional advice when needed, businesses can ensure compliance and optimize their tax obligations. Remember to consult with a qualified tax professional to address specific situations and ensure compliance with all applicable regulations. By adapting to the evolving GST landscape and embracing technology-driven solutions, businesses in the rubber footwear industry can thrive in the new tax regime. Consider looking at Ethylene GST Rates & HSN Code 3901: A Comprehensive Guide to gain further insight into the GST for components used in manufacturing rubber footwear.