GST Classification and Tax Rates for Cotton and Non-Woven Bags
The Authority for Advance Ruling clarified that retail shopping bags are classified under CTH 4202, not as industrial sacks.
- Ruling
- ORDER No. 19/AAR/2018 DATED 28.11.2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Non-woven bags are classified under CTH 4202 22 10.
- Cotton bags are classified under CTH 4202 22 20.
- Non-woven bags attract 18% total GST (9% CGST + 9% SGST).
- Cotton bags attract 12% total GST (6% CGST + 6% SGST).
In short
The company asked the Authority for Advance Ruling (AAR) to decide the correct HSN (Harmonized System of Nomenclature) code and GST rate for their shopping bags. The dispute centered on whether these bags should be treated as simple storage sacks or as retail carry bags.
What has changed
How it worked before
Businesses were often unsure if shopping bags should be classified as industrial sacks under CTH 6305 or as retail carry bags under CTH 4202.
What has changed
The authority ruled that shopping bags used by customers to carry goods are classified under CTH 4202. This means businesses must apply the specific tax rates for this category rather than the rates for industrial packaging.
Who this affects
Manufacturers and suppliers of non-woven or cotton retail carry bags.
An example
A business owner manufactures cotton shopping bags for a local boutique. They previously charged GST based on the classification for industrial sacks. Based on this ruling, they should re-evaluate their HSN code to CTH 4202 22 20 and apply the 12% GST rate to avoid future tax discrepancies.
What you should do
This ruling only applies to the business that asked the question. If you sell similar bags, use this as a guide for your tax position, but consult your own tax advisor to confirm your specific classification.
If you do nothing
If you apply the wrong HSN code, you may underpay your GST. A tax officer could later demand the difference in tax, plus interest and potential penalties for incorrect filing.
The terms explained
- HSN Code
- A standardized system of numbers used to classify goods for taxation purposes.
- CTH
- Customs Tariff Heading, which is the specific category under which a product is listed for tax classification.
- Advance Ruling
- A formal decision from the tax department regarding how GST applies to a specific business situation.
The ruling in detail
Authority for Advance Ruling
Balu Ramamoorthy Sekar, Proprietor of M/s. Savani Screens
ORDER No. 19/AAR/2018 DATED 28.11.2018 · Tamil Nadu
Questions before the authority
- The applicable HSN Code and the Rate of Tax for Non-woven Bags and Cotton Bags.
Facts
The applicant manufactures non-woven bags and cotton bags by cutting, printing, and stitching fabric rolls according to customer requirements. These bags are supplied to textile showrooms and jewelry shops to be used by customers for carrying purchased goods. The applicant sought a ruling on the correct classification and tax rate for these products.
Ruling
| Question | What the authority ruled |
|---|---|
| Non-woven carry bags | CTH 4202 22 10 Taxable at 9% CGST and 9% SGST |
| Cotton carry bags | CTH 4202 22 20 Taxable at 6% CGST and 6% SGST effective 15.11.2017 |
The authority ruled that non-woven carry bags are classifiable under CTH 4202 22 10 and cotton carry bags under CTH 4202 22 20. It further determined that cotton bags are taxable at 6% CGST and 6% SGST, while non-woven bags are taxable at 9% CGST and 9% SGST.
Reasoning
The authority rejected the applicant's contention that the bags fall under CTH 6305, which covers sacks and bags used for the transport or storage of goods. Instead, it determined that because these are shopping bags used for the convenience of carrying items, they fall under CTH 4202. The classification and tax rates were determined based on the material of the bags and the amendments made to the tax rates via Notification No. 41/2017-C.T.(Rate).
Provisions relied on
- Section 98 of the CGST Act 2017
- Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017
- Notification No. 41/2017-C.T.(Rate) dated 14.11.2017
- Customs Tariff Act 1975
For the practitioner
This ruling clarifies that **shopping bags** are classified under CTH 4202 rather than CTH 6305. It provides a clear distinction in tax rates between cotton and non-woven bags based on the specific schedule entries. Practitioners can use this to advise clients on the correct **HSN classification** for retail carry bags.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/tn-19-aar-2018-ss.pdf
Legibility of the scan, as read: high.
Prepared 21-10-2026.
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