01
The 2026 Festive Calendar
Onam through to Bhai Dooj with the dates that matter, plus a buying clock that works backwards from Diwali on 8 November.
Festive Season Planning Guide for Clothing Retail
An 11-page guide to planning the 2026 festive season, working backwards from Diwali on 8 November. The buying clock, the ₹2,500 GST rate line that decides 5% or 18% per garment, the markdown ladder, supplier credit notes, and returns. Every rule cited with its section or notification number.
- The 2026 festive calendar with the dates your buying decisions actually depend on
- Why a discount that crosses ₹2,500 changes the GST rate, not just the price
- A markdown ladder built around Dussehra and Diwali instead of panic in November
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Petpooja presents
Festive Season Planning Guide
For Indian Clothing & Fashion Retail
8
Chapters · 11-page PDF
Festive 2026
What's Inside
What the 11-page guide covers
02
The ₹2,500 Rate Line
Why apparel is 5% at or below ₹2,500 per piece and 18% above, why it is tested per garment and not per bill, and what changed on 22 September 2025.
03
Discounts That Cross the Line
How Section 15(1) and 15(3)(a) mean the rate is tested on the discounted price, with a worked example on a ₹2,999 kurta.
04
Planning the Buy
Sell-through, size curves, carry-forward and realised margin, computed from your own last-season numbers rather than someone else's benchmark.
05
The Markdown Ladder
A five-step ladder timed to Navratri, Dussehra and Diwali, so each cut is smaller and earlier instead of deep and late.
06
Credit Notes and Returns
The difference between a GST credit note and a financial credit note, when you must reverse input tax credit, and how to handle festive exchanges.
Do all of this automatically with Petpooja Invoice
Petpooja Invoice applies the right GST rate to each garment from its billed value, records on-invoice discounts the way Section 15(3)(a) requires, and gives you item-wise and size-wise sales through the peak so the reorder decision is made on data.
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Why This Matters
The Festive Season Is Won in August
Diwali falls on 8 November 2026. That is late, and it moves every other date with it. The buying decisions that determine how the season goes are being made right now, in August, months before a single festive garment is sold.
There is also a number that changed under most retailers’ feet. On 22 September 2025 apparel GST was restructured. The 12% slab was abolished. A garment is now taxed at 5% if its sale value is up to ₹2,500 a piece, and 18% above that. The change took effect on 22 September 2025, and it applies per piece, not per bill.
That distinction is being got wrong at counters. Four kurtas at ₹900 each is four items at 5%. It is not one ₹3,600 sale at 18%. A customer who is overcharged on a festive bill tends to photograph it.
The more interesting consequence is what happens when you discount. Section 15(1) of the CGST Act sets the value of a supply as the transaction value, the price actually paid. Section 15(3)(a) then excludes a discount from that value where it is given at or before the time of supply and recorded on the invoice. So the ₹2,500 test is applied to the discounted price, not to the tag.
A kurta tagged ₹2,999, discounted 20% on the bill to ₹2,399, is taxed at 5% rather than 18%. If your festive range is priced between ₹2,600 and ₹2,900, you are sitting just the wrong side of a rate boundary and paying 18% on all of it. That is a pricing decision worth making deliberately in August, not discovering in your GST returns in December.
None of this helps if the billing system decides the rate from the tag price instead of the billed value, or if discounts are handed over off the bill. Both are common, and both quietly cost margin for eight weeks. It is the sort of thing that separates proper billing software from manual billing when volumes triple.
This guide works backwards from 8 November: when to close the buy, how to build a markdown ladder around Dussehra and Diwali, how supplier credit notes affect your input tax credit, and how to handle the wave of exchanges that arrives after the festival. Every rule carries its section or notification number so you can check it at CBIC yourself.
Sample Preview
Five things the guide settles for you
Here's a preview of what you'll get inside:
The buying clock: August closes the buy, September prices the stock, mid-October is your last realistic reorder window before Diwali
The rate line: 5% at or below ₹2,500 per piece, 18% above, tested per garment and not on the invoice total
The discount crossing: A ₹2,999 kurta discounted 20% on the invoice to ₹2,399 is taxed at 5%, because Section 15(1) values the supply at what is actually paid
The markdown ladder: Full price to 20 October, first cut on slow movers only in late October, hold through Diwali week, clearance from 12 November
Two kinds of credit note: A GST credit note reduces your taxable value and needs an ITC reversal. A financial credit note does not do either.
... plus size curves, sell-through and realised margin worked from your own numbers, festive billing discipline, returns and exchanges, and a five-number season scorecard, across 8 chapters.
Key Stats
The numbers that decide your festive margin
₹2,500
The rate line. A garment sold at or below this is taxed at 5%. Above it, 18%. Tested on each piece separately, never on the invoice total.
Source: CBIC rate schedule in force from 22-Sep-2025; reform confirmed by PIB, GST Reforms 2025, 04-Sep-20258 Nov 2026
Diwali. Peak clothing demand runs from Navratri in early October to the week before this date, then stops. Bhai Dooj on 11 November closes the run.
Source: Standard panchang references, read 03-Aug-202612% gone
The 12% slab was abolished on 22 September 2025. Garments that sat there moved either down to 5% or up to 18%, depending purely on whether they cross ₹2,500.
Source: Press Information Bureau, GST Reforms 2025, dated 04-Sep-2025
Common Mistakes
7 Festive Season Mistakes Clothing Retailers Make
01
Charging one GST rate on the whole bill
Four kurtas at ₹900 each are four items at 5%, not one ₹3,600 supply at 18%. The ₹2,500 test is applied per piece. Over-collecting on a festive bill is the kind of error customers photograph and share.
02
Letting the system decide the rate from the tag price
Section 15(1) values a supply at the price actually paid. Ring up a ₹2,999 item with a 20% discount and check the bill. If it charges 18% rather than 5%, your system is testing the wrong number. Worth checking against your billing software options.
03
Giving discounts off the bill
A discount reduces taxable value only if it is given at or before supply and recorded on the invoice, under Section 15(3)(a). A cash reduction outside the bill means you collected less and still owe GST on the higher value.
04
Pricing a festive range at ₹2,600 to ₹2,900
This band sits just above the rate line and attracts 18%. A modest planned on-invoice discount moves it to 5%. Decide that in August rather than finding it in the return.
05
Committing the whole buying budget in August
Holding nothing back means you cannot chase whatever turns out to be selling in October. Agree the reorder terms with your main suppliers before the season, not during the peak.
06
Discounting into Diwali week
Demand peaks in the days before 8 November. Cutting price then gives away margin on stock that had buyers at full price. Plan the ladder so cuts land in late October and after 12 November.
07
Not asking which credit note a supplier is issuing
A GST credit note under Section 34 reduces your taxable value and requires you to reverse input tax credit. A financial credit note does neither. CBIC clarified this in Circular 251/08/2025-GST dated 12 September 2025. Ask in writing in September, not in December across a dozen suppliers.
Comparison
Apparel GST: Before vs After 22 Sep 2025
| Aspect | Before 22 Sep 2025 | From 22 Sep 2025 |
|---|---|---|
| The 12% slab | Applied to garments above ₹1,000 per piece | Abolished on 22 September 2025 |
| Concessional rate applies up to | ₹1,000 per piece | ₹2,500 per piece |
| Garment at ₹900 | 5% | 5% |
| Garment at ₹1,800 | 12% | 5% |
| Garment at ₹2,400 | 12% | 5% |
| Garment at ₹3,500 | 12% | 18% |
| Tested per piece or per bill | Per piece | Per piece, unchanged |
| Discount recorded on the invoice | Reduces taxable value | Reduces taxable value, and can move the rate |
Swipe the table sideways to see the full comparison.
Plan the season in August, not November
Download the free guide and work backwards from 8 November while the buying decisions are still open.
FAQ
Frequently asked questions
What is the GST rate on clothes in India now?
Apparel is taxed at 5% where the sale value is up to ₹2,500 per piece, and 18% above that. This came in on 22 September 2025, as part of the reform that abolished the 12% slab. The earlier structure applied 5% only up to ₹1,000 and 12% above it, so most mid-priced garments actually got cheaper to tax while the premium end got dearer. This is the general rule for articles of apparel and clothing accessories under Chapters 61 and 62. Specific categories can carry their own treatment, and accessories that are not apparel sit in different chapters entirely, so confirm the rate against the HSN codes you actually sell.
Is the ₹2,500 limit applied per garment or per bill?
Per garment. Each piece is tested against ₹2,500 on its own, and the invoice total is irrelevant. A customer buying four kurtas at ₹900 each is buying four items at 5%, not one ₹3,600 supply at 18%. This is being applied incorrectly at some counters, and over-collecting GST on a festive bill is both a refund problem and a reputation problem.
If I discount a garment below ₹2,500, does the GST rate drop to 5%?
Yes, provided the discount is genuine and recorded on the invoice. Section 15(1) of the CGST Act values a supply at the transaction value, the price actually paid or payable, and Section 15(3)(a) excludes a discount from that value where it is given at or before the time of supply and duly recorded in the invoice. So a kurta tagged ₹2,999 and discounted 20% on the bill to ₹2,399 is taxed at 5%. What you cannot do is invoice below the price the customer actually paid in order to reach the lower rate.
When is Diwali 2026, and when should festive buying close?
Diwali falls on 8 November 2026, with Dussehra on 20 October and Bhai Dooj on 11 November. Working backwards on normal apparel lead times, buying decisions need to close in August, stock should land through September, and mid-October is the last realistic point at which a reorder can reach your shelves before the peak. Keeping monthly GST filings current through the season matters too, because festive months carry the year's highest invoice volume.
What is the difference between a GST credit note and a financial credit note?
A GST credit note under Section 34 adjusts the tax: it reduces the supplier's output tax and your taxable value, and you must reverse the input tax credit attributable to that discount. A financial or commercial credit note does neither, so the supplier's output tax is unchanged and you are not required to reverse credit. CBIC clarified this in Circular 251/08/2025-GST dated 12 September 2025. Ask your suppliers in writing which one they will issue for festive support, before the season. Our free GST calculator is useful for checking individual bills, and the rules for GST credit notes explain the mechanics.
About Petpooja
Petpooja is India's leading SME business software suite, trusted by 1,50,000+ businesses across restaurants, retail, healthcare, manufacturing, and more. From billing and payroll to task management and procurement Petpooja helps Indian businesses run better, every day.
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