New GST Rate for Construction Services in India
- The new GST rates for construction services in India vary by project type, with commercial construction at 18% and affordable housing at 1%.
- Civil construction services like road and highway projects have a 12% GST rate, but can be exempt if they are government contracts.
- Government infrastructure projects have a 12% GST rate, while other government buildings like offices and hospitals are taxed at 18%.
- Businesses must register for GST if their turnover exceeds ₹20 lakhs and use SAC code 9954 for construction services.
- Input Tax Credit is available for commercial projects and some residential projects, but not for affordable housing under the 1% scheme.
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
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 |
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 | 12% or Exempt (if Govt contract) | 9954 |
| Water pipeline/sewer systems | 12% | 9954 |
| Irrigation systems | 12% | 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) | 12% |
| Construction of houses under PMAY/CLSS | 1%–12% |
| Other government buildings (office, hospitals) | 18% |
Type of Government Contract
GST Rate
Type of Government Contract
GST Rate
Type of Government Contract
GST Rate
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% |
Type of Construction
GST Rate
Type of Construction
GST Rate
Type of Construction
GST Rate
Type of Construction
GST Rate
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 |
Service
GST Rate
SAC Code
Service
GST Rate
SAC Code
Service
GST Rate
SAC Code
Service
GST Rate
SAC Code
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% |
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
| 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 |
Commercial projects (under 18% GST)
✅ Yes
Commercial projects (under 18% GST)
✅ Yes
Commercial projects (under 18% GST)
✅ Yes
Commercial projects (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.
