◈1. Platform Overview & GST Applicability
Cloth Bazzar operates as an Electronic Commerce Operator (ECO) as defined under Section 2(45) of the CGST Act, 2017. All transactions facilitated on our platform are subject to GST as applicable to the nature of the goods supplied.
Our platform exclusively deals in apparel and clothing products classified under:
- ◆Chapter 61: Articles of apparel and clothing accessories, knitted or crocheted
- ◆Chapter 62: Articles of apparel and clothing accessories, not knitted or crocheted
- ◆Chapter 63: Other made-up textile articles (where applicable)
◈2. GST Rates on Clothing
The following GST rates apply to clothing products sold on Cloth Bazzar, as prescribed under the GST Council notifications:
| Product Category | Transaction Value | GST Rate | HSN Chapters |
|---|---|---|---|
| Apparel / Clothing | Up to ₹1,000 per piece | 5% | Ch. 61, 62 |
| Apparel / Clothing | Above ₹1,000 per piece | 12% | Ch. 61, 62 |
| Made-up textile articles | All values | 5% / 12% | Ch. 63 |
| Ethnic wear, sarees | Up to ₹1,000 | 5% | Ch. 61, 62 |
| Ethnic wear, sarees | Above ₹1,000 | 12% | Ch. 61, 62 |
| Kids' clothing | Up to ₹1,000 | 5% | Ch. 61, 62 |
| Accessories (scarves, etc.) | All values | 12% | Ch. 61, 62, 63 |
◈3. HSN Code Validation System
Cloth Bazzar operates a proprietary HSN Validation System to ensure every product listed carries the correct Harmonized System of Nomenclature (HSN) code.
3.1 How It Works
- ◆All sellers must select an HSN code from our validated master table when listing a product
- ◆The system maps each product category to its eligible HSN codes automatically
- ◆Tax rates (5% or 12%) are automatically detected from the HSN code and transaction value
- ◆Incorrect or mismatched HSN codes are rejected at the listing stage
- ◆Our admin team periodically audits HSN codes across all active listings
3.2 Seller Responsibility
While Cloth Bazzar provides HSN validation tools, the seller remains ultimately responsible for:
- ◆Ensuring the HSN code accurately describes their product
- ◆Maintaining accurate product descriptions that match the declared HSN
- ◆Updating HSN codes if their product category changes
- ◆Any penalties arising from incorrect HSN declarations made in bad faith
◈4. Invoice Generation
Cloth Bazzar automatically generates a GST-compliant tax invoice for every successful transaction.
4.1 Mandatory Invoice Fields
- ◆Invoice number (unique, sequential, auto-generated) and date/time
- ◆Seller's legal business name, registered address, and verified GSTIN
- ◆Cloth Bazzar's ECO GSTIN
- ◆Customer's name, delivery address, and GSTIN (if provided for B2B purchases)
- ◆Product description, HSN code, quantity, and unit price
- ◆Taxable value, applicable GST rate, and GST amount
- ◆CGST and SGST amounts (intra-state) OR IGST amount (inter-state)
- ◆Total invoice value inclusive of GST, and Place of Supply
4.2 Invoice Access
Customers and sellers can download PDF invoices from their dashboards at any time. Invoices are stored for a minimum of 7 years as required under the CGST Act.
◈5. TCS — Tax Collected at Source
As an Electronic Commerce Operator, Cloth Bazzar is required to collect Tax Collected at Source (TCS) under Section 52 of the CGST Act, 2017:
TCS is deducted before seller settlement. The settlement amount transferred to sellers is net of TCS and platform commission.
◈6. Seller GST Compliance Requirements
6.1 Mandatory Registration
- ◆All sellers must have a valid GSTIN to list and sell on Cloth Bazzar
- ◆GSTIN is verified against the official GST portal database during onboarding
- ◆Sellers whose GSTIN is cancelled, suspended, or revoked will be automatically deactivated
- ◆Sellers below the turnover threshold must still register as they operate through an ECO
6.2 Return Filing
- ◆Sellers are responsible for filing their own GST returns (GSTR-1, GSTR-3B)
- ◆Cloth Bazzar provides monthly sales reports to assist sellers in their return filing
- ◆Mismatches between seller GSTR-1 and Cloth Bazzar's GSTR-8 may trigger notices
6.3 Seller Obligations
- ◆Maintain accurate books of accounts for all transactions on Cloth Bazzar
- ◆Ensure product descriptions match declared HSN codes at all times
- ◆Promptly update the platform if GSTIN details change
- ◆Cooperate with any GST audit or investigation initiated by authorities
◈7. Platform Commission & GST
Cloth Bazzar charges sellers a commission on each successful sale. GST applies to this commission as follows:
- ◆Commission Rate: 5% to 20% of the sale value (category-dependent, as per Seller Agreement)
- ◆GST on Commission: 18% GST applies on Cloth Bazzar's commission (SAC 9985 — intermediary services)
- ◆Commission and applicable GST are deducted from the seller's gross sales before settlement
- ◆A commission tax invoice is issued by Cloth Bazzar to each seller every month
- ◆Sellers may claim Input Tax Credit (ITC) on GST paid on Cloth Bazzar's commission, subject to their own GST compliance
◈8. Returns, Refunds & GST Reversal
8.1 Customer Returns
- ◆Upon admin approval of a return, a Credit Note is issued to the customer
- ◆The Credit Note includes the original invoice reference, returned product details, and GST amount reversed
- ◆The full refund including GST is returned to the customer's original payment method
8.2 Seller Ledger Adjustment
- ◆The seller's internal ledger is adjusted to reflect the reversal of the sale
- ◆GST amounts and TCS previously calculated on the returned order are correspondingly reversed
- ◆Sellers must ensure corresponding GST reversals are reflected in their own GSTR-1 filings
◈9. Inter-State vs Intra-State Transactions
GST application depends on the place of supply, determined by the seller's registered state and the customer's delivery address:
CGST + SGST apply equally.
e.g. 5% = 2.5% CGST + 2.5% SGST
IGST applies at full rate.
e.g. 5% IGST or 12% IGST
Cloth Bazzar's system automatically determines intra-state or inter-state status at checkout and invoices correctly reflect CGST + SGST or IGST accordingly.
◈10. Cloth Bazzar's Obligations as ECO
As an Electronic Commerce Operator, Cloth Bazzar fulfils the following statutory obligations:
- ◆Filing GSTR-8 (TCS return) by the 10th of every month
- ◆Filing GSTR-1 for supplies made on behalf of sellers where applicable
- ◆Maintaining transaction records for all supplies for a period of 5 years
- ◆Providing monthly TCS certificates to all registered sellers
- ◆Cooperating fully with GST audit requests and departmental investigations
- ◆Updating the platform immediately upon notification of changes to GST rates or HSN classifications
◈11. Audit Trail & Record Keeping
Cloth Bazzar maintains a comprehensive, audit-friendly database of all GST-relevant transactions:
- ◆Every order, invoice, return, credit note, and settlement is recorded with full timestamps
- ◆HSN codes, transaction values, and tax amounts are stored immutably
- ◆Audit logs are maintained for 5 years and accessible to authorised government officials upon request
- ◆Our database design supports automated GST reconciliation and reporting
◈12. GST Disputes & Support
For any GST-related queries, disputes, or clarifications, sellers and customers may contact:
If you receive a GST notice related to transactions on Cloth Bazzar, please forward it to the above email immediately so we can assist with the response.
◈13. Changes to This GST Policy
Cloth Bazzar will update this GST Policy as and when GST laws, rates, or compliance requirements change. Sellers will be notified via email and the seller dashboard at least 7 days before any change takes effect. Continued use of the platform after updates constitutes acceptance of the revised policy.