What is the current GST rate for construction services?

It ranges from 1% to 18%, depending on the project type (affordable housing, general residential, commercial).

What is the GST rate for construction services on commercial projects?

It is 18%, with full Input Tax Credit available.

Are government construction services taxed?

Yes, usually at 12%, with exemptions for certain public infrastructure projects.

Can builders claim Input Tax Credit?

Yes, only under the 12% or 18% GST schemes. Not allowed under 1% or 5% concessional rates.

What is the GST rate on civil construction services like roads or bridges?

12% or exempt if it qualifies under specific government infrastructure categories.

New GST Rate for Construction Services in India

Construction services form the backbone of infrastructure and real estate development in India. Whether it’s a housing project, a commercial mall, or a government road, GST applies at every level. This guide explains the gst rate for construction services, how it varies based on project type, and its impact on pricing and compliance.

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GST Rates

New GST Rate on Construction Services in India

The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for common construction service categories (no compensation cess).

New GST Rate for Construction Services (General)

Type of Construction	GST Rate
Commercial construction services	18%
Residential complex (under construction, with ITC)	12%
Residential complex (under new scheme, without ITC)	5%
Affordable housing projects (new scheme)	1

New GST Rate on Civil Construction Services

Service	GST Rate	SAC Code
Road/highway construction	12% or Exempt (if Govt contract)	9954
Water pipeline/sewer systems	12%	9954
Irrigation systems	12%	9954
Commercial civil works	18%	9954

New GST Rate on Construction Services to Government

Type of Government Contract	GST Rate
Works contract for government projects (infrastructure)	12%
Construction of houses under PMAY/CLSS	1%–12%
Other government buildings (office, hospitals)	18%

Notes: Under the rationalised slabs, prior 12% entries generally align to 5%. Exemption continues for specifically notified public works; commercial/non-notified works remain at 18%.

What Are Construction Services Under GST?

Construction services include any work related to:

Building construction (residential, commercial, industrial)
Civil engineering projects (roads, bridges, water systems)
Repairs and renovations
Public infrastructure projects

These services fall under SAC Code 9954, and are taxed differently depending on whether the project is residential, commercial, or government-related.

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Old GST Rate for Construction Services (General)

(Old GST Rates – Applicable Until 21st September)

Type of Construction	GST Rate
Commercial construction services	18%
Residential complex (under construction, with ITC)	12%
Residential complex (under new scheme, without ITC)	5%
Affordable housing projects (new scheme)	1%

Old GST Rate on Civil Construction Services

Service	GST Rate	SAC Code
Road/highway construction	12% or Exempt (if Govt contract)	9954
Water pipeline/sewer systems	12%	9954
Irrigation systems	12%	9954
Commercial civil works	18%	9954

Old GST Rate on Construction Services to Government

Type of Government Contract	GST Rate
Works contract for government projects (infrastructure)	12%
Construction of houses under PMAY/CLSS	1%–12%
Other government buildings (office, hospitals)	18%

GST Compliance for Construction Businesses

Must register under GST if turnover exceeds ₹20 lakhs
Use SAC code 9954 for invoicing
Maintain separate records for ITC-eligible and ineligible projects
File monthly or quarterly GST returns

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Input Tax Credit in Construction Services

Commercial projects (under 18% GST)	✅ Yes
Residential under old 12% scheme (pre-2019)	✅ Yes
Residential under 5% scheme (post-2019)	❌ No
Affordable housing under 1% scheme	❌ No
Government projects (at concessional rates)	Depends on contract terms

Conclusion

Knowing the correct gst rate for construction services helps contractors, builders, and clients quote, budget, and bill correctly—especially when projects span residential, commercial, and government categories.

Susheel Kumar

Chartered Accountant

MRN No.: 096252

City: Delhi

I am a Chartered Accountant with over 20 years of experience and a finance content writer. I focus on educating people about finance and taxation. I have written many blog posts on finance, taxation, trading, and investment on the BUSY website. My goal is to increase financial understanding by making complex concepts easier to grasp and to support educational programs in India.

Frequently Asked Questions

What is the current GST rate for construction services?

It ranges from 1% to 18%, depending on the project type (affordable housing, general residential, commercial).
What is the GST rate for construction services on commercial projects?

It is 18%, with full Input Tax Credit available.
Are government construction services taxed?

Yes, usually at 12%, with exemptions for certain public infrastructure projects.
Can builders claim Input Tax Credit?

Yes, only under the 12% or 18% GST schemes. Not allowed under 1% or 5% concessional rates.
What is the GST rate on civil construction services like roads or bridges?

12% or exempt if it qualifies under specific government infrastructure categories.

View all FAQs