New GST Rate for Construction Services in India
- 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.
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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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% |
Type of Construction
GST Rate
Type of Construction
GST Rate
Type of Construction
GST Rate
Type of Construction
GST Rate
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 |
Service
GST Rate
SAC Code
Service
GST Rate
SAC Code
Service
GST Rate
SAC Code
Service
GST Rate
SAC Code
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% |
Type of Government Contract
GST Rate
Type of Government Contract
GST Rate
Type of Government Contract
GST Rate
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.
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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% |
Type of Construction
GST Rate
Type of Construction
GST Rate
Type of Construction
GST Rate
Type of Construction
GST Rate
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 |
Service
GST Rate
SAC Code
Service
GST Rate
SAC Code
Service
GST Rate
SAC Code
Service
GST Rate
SAC Code
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% |
Type of Government Contract
GST Rate
Type of Government Contract
GST Rate
Type of Government Contract
GST Rate
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
| 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 |
Type of Construction
ITC Available
Type of Construction
ITC Available
Type of Construction
ITC Available
Type of Construction
ITC Available
Type of Construction
ITC Available
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.
