GST on Bags: Backpack, School Bag, Handbag HSN and Rate

Updated 28 October 2026 · By Ashok Sachdev · Sources: Notification 9/2025-Central Tax (Rate); PIB release on the 56th GST Council meeting. Not tax advice; confirm with your CA.

Bag shops get one big wrong idea from the September 2025 GST cuts: "bags went to 5%". Only a narrow group did. A jute backpack is not a jute shopping bag. A school bag is not a cotton tote. This guide lists the HSN and rate for what a bag, luggage or school-supplies counter sells, with a worked bill and the mistakes to avoid.

In short

• 18%: school bags, backpacks, rucksacks, suitcases, trolley and travel bags, laptop bags, wallets, purses, and handbags of leather, PU, plastic or most fabric.
• 5%: handbags and shopping bags of cotton or jute, paper bags, and umbrellas (6601).
• Old rate for the 5% group: 12% until 21 September 2025.
• Leather belts (4203): 18%.

Rate and HSN for a bag shop

The rate is split as 9% CGST + 9% SGST (or 18% IGST), and 2.5% + 2.5% (or 5% IGST) for the low group. Our pages on school bags and handbags and wallets carry the schedule serial numbers.

Where bag shops go wrong

1. Billing every bag at 5%

The 5% entry names "handbags and shopping bags" of cotton or jute, with specific tariff items. It does not cover school bags, backpacks, suitcases or laptop bags, even if they are made of cotton canvas or jute. Those remain in the 18% group. The schedule entry for 4202 at 18% names trunks, suitcases, school satchels, travelling bags, rucksacks, handbags, wallets and purses.

2. Treating a PU "leather" handbag as 5%

Only cotton and jute handbags moved down. A PU, plastic, polyester or leather handbag is 18%. If a bag's label says "jute-look" or "canvas" and you cannot tell the material, check the supplier's invoice for the tariff item and ask them to state the fibre.

3. Keeping 12% on cotton and jute totes

Tote bags, jhola bags and promotional jute bags are often cheap and sold in bulk. Left at 12%, they are overcharged on every bill and on every wholesale invoice.

4. Gift combos

A bag sold with a wallet and a pen in a festive box is a combination of different rates. Under Section 8 of the CGST Act, a mixed supply can be taxed at the highest rate. Ask your CA before selling fixed-price combos, or bill each item on its own line.

Worked bill (EXAMPLE figures)

A customer in the same state buys four items on a school-season day. Prices are before GST.

The invoice total is ₹2,531. Charging a flat 5% on all four would give ₹110, an under-charge of ₹221 on one bill. Charging a flat 18% would give ₹396 and overcharge the customer by ₹65. Both are wrong. The jute backpack is the line most people get wrong, since it is made of jute but is not a jute handbag or shopping bag.

What to put on the invoice

• Item names with the material. "Bag" is not enough. Use "Tote bag, cotton" and "Backpack, polyester" so the rate is clear to the cashier and the customer.
• HSN on each line. For B2B invoices, Notification 78/2020-Central Tax sets 4 digits up to ₹5 crore turnover and 6 digits above. Ask your CA about B2C bills.
• Stock bought before 22 September 2025. If you bought cotton totes at 12% GST and sell them now, charge 5% on the sale. The invoice from your supplier shows what you paid, not what you charge.

Selling school stationery as well? Read GST on stationery and school items. For an HSN you cannot find here, use the HSN and GST rate finder, or read how to find the HSN code for a product.

How RichPOS helps a bag shop

In RichPOS you save the HSN code and GST rate against each item once, such as 4202 at 18% for a backpack and 4202 22 20 at 5% for a cotton tote. Each bill then applies the saved rate to that line and shows the tax on the invoice. RichPOS does not choose the HSN for you, so enter the code from your supplier's invoice. See features and pricing.

RichPOS is free for 30 days, then ₹99/month for the first 3 months, then ₹199/month or ₹1,999/year. No GST is added to these prices.

Rates checked on 28 October 2026 against Notification 9/2025-Central Tax (Rate) dated 17 September 2025 (in force 22 September 2025) and PIB, 56th GST Council, Annexure I. General information, not tax advice. Mixed fabrics, combo packs and returns spanning the rate change need your CA's view.