--- title: "New GST Rate for Construction Services 2026: 5% / 18% GST Rate" description: "New GST rate on construction services in 2026 is 5% to 18% on residential and commercial projects. Use Busy to auto-apply the correct GST on every invoice." canonical: "https://busy.in/gst-rates/construction-services/" author: "Susheel Kumar" published: "2025-05-16T07:43:45.000Z" category: "GST Rates" --- - Most general construction and works contract services under SAC 9954 attract **18% GST**. - Affordable residential apartments under the specified promoter scheme attract **1% GST without ITC**. - Road, highway and most government construction contracts generally attract **18% GST**; they are not exempt merely because the recipient is the government. - Specified government earthwork and offshore works contracts moved from 12% to **18% with ITC** from 22 September 2025. - GST registration is generally required when aggregate turnover exceeds ₹20 lakh, subject to the applicable threshold. - ITC depends on the type of construction service; the 1% and 5% promoter schemes do not allow ITC. # 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**](https://busy.in/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. ## **New GST Rate on Construction Services in India** GST rates for construction services vary depending on the type of project and applicable scheme. Below are the GST rates for common construction service categories. ## **New GST Rate for Construction Services (General)** | Type of Construction | GST Rate | | --- | --- | | Commercial construction services | **18%** | | Residential complex (eligible ongoing project under old scheme, with ITC) | **12%** | | Residential complex (under new scheme, without ITC) | **5%** | | Affordable housing projects (new scheme, without ITC) | **1%** | ## New GST Rate on Civil Construction Services | Service | GST Rate | SAC Code | | --- | --- | --- | | Road/highway construction | **18%** | 9954 | | Water pipeline/sewer systems | **18%** | 9954 | | Irrigation systems | **18%** | 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) | **18%** | | Construction of houses under PMAY/CLSS as works contract | **18%** | | Other government buildings (offices, hospitals) | **18%** | **Note:** Government construction contracts are not automatically exempt or eligible for a lower GST rate. Specified government earthwork contracts that earlier attracted 12% GST moved to 18% from 22 September 2025. Separate concessional rates may apply to qualifying residential apartments under the real-estate promoter scheme. ## 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. **Get a Free Trial –** [**Best Accounting Software For Small Business**](https://busy.in/accounting-software/) Live Demo Available Today ## Issue Debit Notes for Contractor Penalties or Delays Instantly Trusted by 6,00,000+ Users 4.6 Google Rating \* No credit card required ## **Old GST Rate for Construction Services (General)** ### **GST Rates Applicable Before 22nd September 2025** | 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%** | **Note:** These general construction and residential real-estate rates were not changed by the GST rationalisation effective from 22 September 2025. The 12% rate with ITC continues only for eligible ongoing residential projects under the old scheme. ## Old GST Rate on Civil Construction Services | Service | GST Rate | SAC Code | | --- | --- | --- | | Road/highway construction | **18%** | 9954 | | Water pipeline/sewer systems | **18%** | 9954 | | Irrigation systems | **18%** | 9954 | | Commercial civil works | **18%** | 9954 | **Note:** Before 22 September 2025, specified works contracts involving more than 75% earthwork supplied to Government attracted 12% GST with ITC. This rate moved to 18% from 22 September 2025. ## Old GST Rate on Construction Services to Government | Type of Government Contract | GST Rate | | --- | --- | | Works contract for government projects (infrastructure) | **18%** | | Construction of houses under PMAY/CLSS | **Nil / 1% / 18%, as applicable** | | 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 **Get a Free Demo –** [**Best Billing and Invoicing Software**](https://busy.in/accounting-software/invoicing-and-gst-billing/) ## **Input Tax Credit in Construction Services** | Type of Construction | ITC Available | | --- | --- | | Commercial projects (under 18% GST) | **Yes** | | Residential under old 12% scheme (eligible ongoing projects) | **Yes** | | Residential under 5% scheme (post-2019) | **No** | | Affordable housing under 1% scheme | **No** | | Government works contracts under 18% GST | **Yes** | ## 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. ## About the author **Susheel Kumar** 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%. Input Tax Credit may be available subject to the applicable GST conditions and restrictions. ### Are government construction services taxed? Yes. Most government construction and works contract services attract 18% GST. Exemptions may apply only to specifically notified services or projects. ### Can builders claim Input Tax Credit? ITC may be available under eligible 12% or 18% GST schemes, subject to applicable GST conditions and restrictions. It is not available under the 1% or 5% promoter schemes. ### What is the GST rate on civil construction services like roads or bridges? Civil construction services such as roads or bridges generally attract 18% GST under SAC 9954. ## Related articles - [New GST on Skincare Products: Rate, Branding & Retail Pricing](https://busy.in/gst-rates/skincare-products/) - [New GST on Industrial Machinery: Slabs, ITC & MSME Effect](https://busy.in/gst-rates/industrial-machinery/) - [New GST on Restaurant Meals: Dine-in, Takeaway & Delivery Compared](https://busy.in/gst-rates/restaurant-meals/) - [New GST on Kitchen Utensils: What’s Taxed and What’s Not?](https://busy.in/gst-rates/kitchen-utensils/) - [New GST on Online Education: Rate, Exemptions & EdTech Impact](https://busy.in/gst-rates/online-education/) - [New GST on Packaging Materials: Tax Implication Across Industries](https://busy.in/gst-rates/packaging-materials/) - [New GST on Digital Marketing Services: Tax Rates & Input Credit Explained](https://busy.in/gst-rates/digital-marketing-services/) - [New GST on Pesticides: Rates, Agri-Exemptions & Sector Impact](https://busy.in/gst-rates/pesticides/) - [New GST on Butter: From Dairy to Dining – What You Pay](https://busy.in/gst-rates/butter/) - [GST on Honey: Rate, Applicability & Industry Outlook](https://busy.in/gst-rates/honey/)