Ladies Rejoice: GST Council Slashes Tax on Handbags to 5%

The GST Council has announced a reduction in the Goods and Services Tax ( GST ) rate on handbags from the existing higher slab of 12% to just 5%.

This is big for ladies who love shopping hand bags. By reducing the GST rate, ultimately, the consumer rate will be reduced, which will improve the sale of these handbags made of cotton and jute.

This reduction is expected to make these products more affordable for consumers while giving a major push to the handicraft and eco-friendly bag sector. However, the handbags belonging to luxury brands made of jute or cotton will be taxed at the same rate, which may be favourable more for the brands and the luxury spenders.

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Cotton and jute bags, positioned as sustainable alternatives to plastic, are set to benefit from increased consumer demand due to the reduced cost. Similarly, artisans and small-scale manufacturers producing handicraft handbags and accessories are likely to see higher sales volumes in domestic and international markets.

It is consumer-friendly and industry-supportive reform. The experts believe the lower GST rate will encourage buyers to shift towards eco-friendly and handcrafted products, developing India’s sustainable and handicraft industries.

The 56th GST ( Goods and Services Tax ) council meeting was held on 3rd September 2025 under the chairmanship of Finance Minister Nirmala Sitharaman. The new rate will come into effect on 22nd September 2025.

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