GST for Construction Materials: A Detailed Guide
Whether you’re building a house, a commercial space, or an infrastructure project, materials like cement, bricks, steel, and tiles make up a major portion of the budget. Understanding the applicable gst for construction materials helps builders, contractors, and buyers estimate project costs and manage taxes better.
BOOK A FREE DEMO
Why GST on Construction Materials Matters
Before GST, building materials were taxed under various state VATs and central excise duties. The introduction of GST brought uniform tax rates across India. While it simplified the process, it also raised the tax burden on some materials. Let’s explore the construction material gst rate category by category.
Get a Free Demo of – Real Estate Accounting & Billing Software
GST Rates on Common Building Materials
| Material | HSN Code | GST Rate |
|---|---|---|
| Cement (all types) | 2523 | 28% |
| Bricks (non-baked) | 6901 | 5% |
| Fly ash bricks | 6815 | 5% |
| Sand (natural or manufactured) | 2505 | 5% |
| Steel (TMT bars, rods) | 7214 | 18% |
| Iron and steel | 7206–7215 | 18% |
| Wood (raw) | 4401 | 5% |
| Tiles (ceramic, vitrified) | 6907 | 18% |
| Paint | 3208 | 28% |
| Electrical wiring & switches | 8536 | 18% |
| Pipes (PVC, CPVC) | 3917 | 18% |
| Sanitaryware | 6910 | 18% |
| Glass sheets | 7004 | 18% |
GST Impact on Construction Cost
Materials like cement and paint attract a high 28% GST, which increases the base cost of construction. Meanwhile, essentials like bricks, sand, and fly ash are taxed at just 5%, keeping them affordable.
Items taxed at 18% like steel, tiles, wiring, and bathroom fittings fall in the mid-range, forming a large share of construction expenditure.
Knowing these slab-wise differences helps builders and homebuyers make smarter procurement choices.
Get a Free Trial – Best Accounting Software For Small Business
Input Tax Credit for Builders
Builders and contractors registered under GST can claim Input Tax Credit (ITC) on the GST paid for construction materials.
However, if the construction is for personal use or for selling as completed property, ITC is not allowed under certain rules. For under-construction properties, developers can claim ITC only under the old 12% GST regime (if opted before April 2019).
So, the benefit of ITC depends on:
- GST rate opted by builder
- Type of construction (residential vs commercial)
- Stage of completion and sale
Get a Free Trial – Best GST Accounting Software For Small Business
Tips for Buyers and Contractors
- Always check the GST rate on materials before placing bulk orders
- Get GST-compliant invoices from suppliers
- Verify that suppliers have valid GST numbers
- Use proper HSN codes in billing to avoid classification errors
Conclusion
Understanding the correct gst for construction materials helps in budgeting, pricing, and compliance. Whether you’re building a home or managing a large project, knowing the construction material gst rate ensures better financial planning.
Jagdish Prasad is a Chartered Accountant with over 5 years of experience. He helps people and businesses with GST, income tax, and HSN codes. Jagdish makes sure his clients follow all tax rules and save money the right way. He also enjoys writing simple articles to help others understand taxes and stay updated with the latest rules.
Frequently Asked Questions (FAQs)
- What is the GST on cement in India?Cement attracts the highest GST of 28%, under HSN code 2523.
- What is the GST on building materials like bricks and sand?Bricks and sand are taxed at 5% GST.
- What is the GST on tiles and sanitaryware?Tiles, sanitaryware, and bathroom fittings come under 18% GST.
- Can builders claim ITC on construction materials?Yes, if they are GST-registered and eligible under the scheme they have opted for.
- Does GST apply to materials bought for personal house construction?Yes. GST is charged on all purchases, but ITC is not available for personal use.
