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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.
Construction services include any work related to:
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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| 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% |
| 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 |
| 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% |
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| Scenario | ITC Allowed? |
|---|---|
| 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 |
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.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.