Selling handbags online in India: licences, GST rate and label rules

Handbags need no product licence; GST depends on what the bag is made of. Cotton and jute handbags (4202 22 20/30) and handcrafted handbags, pouches and purses pay 5%. Other handbags, including leather, PU and polyester, pay 18% (Schedule II, S.No. 145 of Notification 9/2025-CT(R)).

Selzix Team

Oct 25, 20266 min read

Woven fibre tote bags in orange, purple, pink, yellow and white with leather handles, displayed on a market table

In this post · 9 sections

Short answer: Handbags need no product licence; GST depends on what the bag is made of. Cotton and jute handbags (4202 22 20/30) and handcrafted handbags, pouches and purses pay 5%. Other handbags, including leather, PU and polyester, pay 18% (Schedule II, S.No. 145 of Notification 9/2025-CT(R)).

Rules and rates checked on 24 October 2026. Sources are listed at the end of this page.

Licences and registrations

What	Do you need it?	Cost	Where
GST registration	Yes if you ship to any other state; otherwise only above ₹40 lakh turnover (₹20 lakh or ₹10 lakh in some states)	No fee is stated in the notifications read	GST common portal (gst.gov.in)
Product licence for handbags	No	None	Not applicable

GST registration. Section 24(i) of the CGST Act makes registration compulsory for anyone making inter-State taxable supplies, whatever the turnover. Notification 10/2019-CT exempts goods-only sellers up to ₹40 lakh, but that exemption excludes section 24 cases and intra-state sellers in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand.

Product licence for handbags. None of the GST, Legal Metrology or e-commerce rules read for this page set a licence for making or selling handbags.

GST rate and HSN code

HSN 4202: Handbags, shopping bags, wallets, purses and similar containers of leather, plastic sheeting or textile materials. GST rate: 18% (Notification 9/2025-CT(R), Schedule II, S.No. 145 (cotton: Schedule I, S.No. 289; jute: S.No. 290)). Before 22 September 2025 it was 12% for cotton, jute and handicraft handbags; 18% for others (unchanged).

Schedule II, S.No. 145 puts heading 4202 at 18%. That includes handbags, wallets and purses of leather, plastic sheeting or textile, "other than handbags and shopping bags, of cotton or jute". Those two are in Schedule I at 5%: S.No. 289 (4202 22 20, of cotton) and S.No. 290 (4202 22 30, of jute). The PIB note lists both as moved from 12% to 5%.

Handcrafted bags have a separate entry. Notification 13/2025-CT(R) amended the handicraft notification 21/2018-CT(R) to set 2.5% CGST, so 5% in total, on "Handbags including pouches and purses; jewellery box". It covers 4202 22, 4202 29, 4202 31 10, 4202 31 90, 4202 32 and 4202 39. It does not list 4202 21, which is handbags with an outer surface of leather. A "handicraft" must be predominantly made by hand, have visual appeal from ornamentation or ethnic or cultural features, and be clearly different from machine-made goods.

Worked example: one sale at ₹899

Price the buyer pays (GST included)	₹899
Taxable value	₹761.86
Buyer in your state: CGST + SGST	₹68.57 + ₹68.57
Buyer in another state: IGST	₹137.14

What the label and product page must show

Pack: generic name with material, for example "jute tote bag" (rule 6(1)(b)).
Pack: dimensions where relevant, such as width, height and depth (rule 6(1)(f)).
Pack: country of origin and importer details for imported bags (rules 6(1)(a), 6(1)(aa)).
Product page: state the outer material plainly. "Vegan leather" should say what it is, such as PU. E-Commerce Rule 7(2) bars misrepresenting features.
Pack: name and address of the manufacturer, and of the packer or importer where different (Legal Metrology (Packaged Commodities) Rules 2011, rule 6(1)(a)).
Pack: MRP in rupees, stated as inclusive of all taxes (rule 6(1)(e)).
Product page: show every rule 6(1) declaration except the month and year of manufacture, which rule 6(10) lets online listings leave out.
Product page: return, refund, exchange, delivery and payment terms, and the total price as one figure (Consumer Protection (E-Commerce) Rules 2020, rule 7(1)).
Website: your legal name, address, customer care contact and a grievance officer who acknowledges complaints within 48 hours and resolves them within one month (E-Commerce Rules, rules 4(2), 4(4), 4(5)).

Packing, shipping and listing

The material sets the price you can charge. An ₹899 jute bag at 5% has a taxable value of ₹856.19 and GST of ₹42.81. An ₹899 PU bag at 18% has a taxable value of ₹761.86 and GST of ₹137.14. That is ₹94.33 less for you at the same shelf price.

To use the 5% handicraft rate, keep evidence that the bag is predominantly handmade. Process photos and artisan invoices help. The definition in Notification 21/2018 requires visual appeal from ornamentation, inlay or ethnic features, and a clear difference from mechanically produced bags.

Mistakes to avoid

Charging 5% on a handmade leather handbag. The handicraft entry lists 4202 22 and 4202 29 but not 4202 21, the leather-outer-surface handbags.
Calling a cotton-polyester blend "cotton" to get 5%. The Schedule I entries are for handbags "of cotton" and "of jute".
Billing PU "vegan leather" bags as textile. Plastic sheeting outer surfaces are 18% under S.No. 145.
Charging 18% on handmade purses and pouches that qualify as handicrafts. 4202 31 and 4202 32 are in the 5% handicraft entry.
Shipping out of state before taking GST registration.

On your own Selzix store

You set the HSN code and GST rate on each product, and every order gets a GST invoice with the CGST and SGST or IGST split worked out from the buyer's state. Not sure you need GST at all? Read GST for online sellers in India.

Questions sellers ask

What is the GST rate on handbags in India?

18% for most handbags under HSN 4202, including leather and PU. Cotton and jute handbags are 5%, and so are handcrafted handbags, pouches and purses that meet the handicraft definition. These rates apply from 22 September 2025.

What is the HSN code for jute bags?

4202 22 30 for handbags and shopping bags of jute, at 5% under Schedule I, S.No. 290. Cotton handbags are 4202 22 20 under S.No. 289.

What is the GST on leather bags?

18%. Leather handbags fall under heading 4202 in Schedule II, S.No. 145. The 5% handicraft entry does not cover 4202 21, which is handbags with a leather outer surface.

Sources

Notification No. 9/2025-Central Tax (Rate), 17 September 2025 (Gazette copy), Ministry of Finance, Department of Revenue (copy hosted by EPCES) (read 24 October 2026)
Notification No. 9/2025-Central Tax (Rate), CBIC Tax Information Portal (read 24 October 2026)
Recommendations of the 56th Meeting of the GST Council (press release with Annexures I and II), Press Information Bureau, Ministry of Finance (copy on GST Council website) (read 24 October 2026)
Notification No. 13/2025-Central Tax (Rate), amending Notification 21/2018 (handicrafts), CAclubindia (reproduction of CBIC notification) (read 24 October 2026)
Notification No. 21/2018-Central Tax (Rate): supplies of specified handicraft goods, GSTGyaan (consolidated text) (read 24 October 2026)
HSN 4202 subheadings (handbags by outer surface material), EximPe HSN finder (CBIC/ICEGATE data) (read 24 October 2026)
Legal Metrology (Packaged Commodities) Rules, 2011 (rules 2, 3, 6, 26), LegitQuest (bare act text) (read 24 October 2026)
Consumer Protection (E-Commerce) Rules, 2020, LegitQuest (bare act text) (read 24 October 2026)
Notification No. 10/2019-Central Tax: registration exemption up to Rs 40 lakh for suppliers of goods, GSTZen (notification text) (read 24 October 2026)
Section 24: compulsory registration under GST, TaxGuru (read 24 October 2026)

General information, not tax or legal advice. Rules change; check the source before you file or apply. Cover photo: Tofan Teodor on Unsplash.