GST on Sand in India: Natural Resources and Taxation

Sand is a critical raw material used in construction, plastering, and infrastructure development. With the implementation of the Goods and Services Tax (GST), sand suppliers, construction businesses, and buyers must understand how gst on sand is applied across different categories and uses.

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    GST Rates

    GST Rate on Sand

    Under GST, sand is treated as a natural resource and its taxation depends on the type and usage.

    Type of Sand HSN Code GST Rate
    Natural sand (excluding metal-bearing) 2505 5%
    River sand (unprocessed) 2505 5%
    Silica sand and quartz sand 2505.10 5%
    Manufactured sand (M-sand) 2505 5%
    Fly ash or crushed sand mix 6815 18%

    GST on River Sand

    River sand, which is naturally sourced and unprocessed, is taxed at a concessional rate.

    • River sand GST rate: 5%
    • HSN Code: 2505
    • Applicable for sand used in construction, levelling, and landscaping

    GST on M-Sand and Processed Sand

    Manufactured sand (M-sand) is used as a substitute for river sand, especially where sand mining is restricted.

    • M-sand GST Rate: 5%
    • If mixed with cement, fly ash, or chemically processed: 18%

    GST Compliance for Sand Suppliers

    If you’re in the sand supply business:

    • GST registration required if turnover exceeds ₹40 lakhs
    • Use HSN Code 2505 on GST invoices
    • File regular returns
    • Mention transportation or royalty charges separately (which may attract additional GST)
    • Input Tax Credit (ITC) is available on inputs used for sand extraction, transport vehicles, machinery maintenance, etc.

    Challenges in Sand Taxation

    • Mining Royalties: GST applies to mining rights and royalties paid to the government for extraction
    • Transport GST: 5% or 12% based on transporter category
    • Misclassification: Misreporting of processed sand as natural sand may lead to notices or penalties

    Conclusion

    Understanding the gst on sand helps suppliers, builders, and contractors manage project costs better and comply with tax rules. With sand being such a foundational material, knowing how it’s taxed is essential for smooth operations.

    Frequently Asked Questions (FAQs)

    • What is the GST rate on sand in India?
      The GST rate on natural sand is 5%, under HSN Code 2505.
    • Is GST applicable on river sand?
      Yes. The river sand GST rate is 5%, if sold without processing or additives.
    • Does processed sand have a higher GST?
      Yes. If sand is mixed with cement or fly ash, it may attract 18% GST.
    • Can a construction company claim ITC on sand purchases?
      Yes, if the sand is used for business purposes and proper invoices are maintained.
    • Are mining royalties for sand subject to GST?
      Yes. Royalties paid to the government for sand mining are taxable under GST.
    View all FAQs
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