Narela Industrial Area, Delhi
Accounting for Narela's footwear and slipper units
Narela has plastics, cable, food and footwear units. Footwear has a feature most products lack: the GST rate on a pair depends on its price. A footwear unit can also end up paying more tax on its materials than it charges on its sales, and it counts stock in pairs and sizes rather than kilos.
The price of a pair decides the rate
The GST Council recommended, with effect from 22 September 2025, cutting the rate on footwear of sale value not exceeding ₹2,500 per pair from 12% to 5%, and keeping footwear above ₹2,500 per pair at 18%. Check the notification in force before you bill. What follows is our general analysis of the records this calls for.
| What to record | Why it matters |
|---|---|
| Quantity in pairs on every invoice line | The limit is tested per pair, so cartons or dozens alone do not show it |
| Value per pair for each article | Shows which side of ₹2,500 each line falls, and that the right rate was charged |
| Articles priced close to ₹2,500 | A price rise, discount or scheme can move them across the line. Ask how discounts affect the value per pair |
| Orders billed around 22 September 2025 | Two rates applied either side of that date, so check each invoice used the one in force |
When credit builds up
If the tax on your materials is higher than the 5% you charge, credit can pile up faster than you can use it. Section 54(3) of the CGST Act allows a refund of unused input tax credit where it has built up because the rate on inputs is higher than the rate on output supplies, other than nil-rated or fully exempt supplies, and except for supplies the government notifies.
Rule 89(5) of the CGST Rules works out that refund from credit on inputs only. Credit on services, such as rent, repairs or transport, sits outside the calculation. So keep the two apart in your books from the start, rather than sorting them out when you claim.
Before you claim
- Confirm the rates you actually paid on your main materials, from the bills
- Check that footwear is not among the supplies notified as excluded
- Make sure purchases are reflected properly in your returns before you count on the credit
- Ask about provisional refunds: the Council recommended 90% on a risk basis for these claims, so check how that now works
The copies of the Act and Rules we read are dated, so ask Deepak Mittal to check the current wording for your case.
Stock in pairs, sizes and kilos
Compound and granules are bought by weight, soles and uppers by piece, and finished goods sold in pairs and size sets. Your stock records need a way to move between these.
- A normal yield, in pairs per kilo of compound, for your main articles
- Finished stock counted by article and size, not only in cartons
- Rejects and seconds recorded separately, with what they sold for
- Odd sizes left from broken sets reviewed, since they may be worth less than cost
Moulds and machines
Each article and size can need its own mould. Moulds cost real money and wear out, so list them in your fixed asset register with the article they make, rather than writing them off as expenses. When a design is dropped, note which moulds are no longer used.
The rest of a unit's workflow, from material issue to job work, is on accounting for manufacturers.
Workers paid through contractors
A 2022 study of footwear workshops in Narela by researchers at O.P. Jindal Global University found workers paid daily, weekly, monthly or on contract. It described labour contractors who supply and organise workers for a commission.
If you pay a contractor, keep their bill, the attendance behind it and proof of payment by bank. Ask Deepak Mittal whether tax should be deducted from the payment, and who is responsible for PF and ESI. See payroll.
If stock is lost in a fire
Press reports describe several fires at footwear units in Narela, in 2022, 2025 and 2026. This page does not suggest anything about any particular business. A loss is far easier to deal with if your records survive it.
- Keep stock records and bills backed up away from the factory
- Compare the insured value with your actual stock from time to time
- Keep the fire service and surveyor's reports with the loss entry
- Ask about credit already taken: section 17(5)(h) of the CGST Act blocks credit on goods destroyed or written off
About the area, and about us
Delhi's Department of Industries lists Narela in its North Zone. If your question is about a plot under the relocation scheme rather than your product, see the Bawana page, as the same questions apply in Narela. AccountOrbit takes enquiries by phone from anywhere in Delhi, including Narela, but has no office there. For a footwear unit, your price list per article and a recent month's purchase bills are the most useful things to have to hand on the first call.
Sources checked, November 2026
- PIB release on the 56th GST Council meeting, 3 September 2025 (opens in a new tab), footwear rates, effective date and provisional refunds (read at source; the rate notification itself was not read)
- CGST Act as amended to 1 January 2022 (opens in a new tab), sections 17(5)(h) and 54(3), and CGST Rules as amended to 1 June 2021 (opens in a new tab), rule 89(5) (read at source; check for later changes)
- The Wire, October 2022 (opens in a new tab) (study by the Centre for New Economics Studies, O.P. Jindal Global University)
- ThePrint, November 2022 (opens in a new tab), All India Radio, October 2025 (opens in a new tab), The Tribune, April 2026 (opens in a new tab) (press reports); Department of Industries, North Zone (opens in a new tab) (official list of the area)
Running a footwear unit in Narela?
Tell us what you make, your usual price per pair, and how stock and labour are recorded today.
