Work Contract HSN Code: Understanding HSN Classifications for Work Contract Services
Work contract services are common in construction, repair, interior work and large civil projects. A single work contract often covers both supply of material and labour for making an immovable property.
Under GST it is very important to use the correct work contract HSN code so that tax is charged properly and both contractor and client can report the contract correctly in their GST returns.
What Is the Work Contract HSN Code?
In GST, a works contract for construction or civil work is treated as a service rather than as separate sale of goods and labour. Services are classified using Service Accounting Codes which work like HSN codes for goods.
Most construction related works contract services on buildings and civil structures are grouped under the service code 9954. This code covers construction services for residential, commercial, industrial and civil engineering projects.
For normal private projects, the composite supply of works contract linked with immovable property is usually mapped to this 9954 family. Pure labour contracts that do not involve transfer of property in goods can sometimes fall under other service codes, but for most standard construction contracts 9954 is treated as the main work contract HSN code.
Because 9954 is specific to construction and civil work, using this code makes it clear that the contract is a works contract service and not a simple supply of building material.
| HSN Code | Product Description | Product Type or Variant | GST Rate |
|---|---|---|---|
| 9954 | Works contract services for commercial and industrial buildings | Composite supply of material and labour for factories, offices, malls, warehouses and similar properties | 18% |
| 9954 | Works contract services for residential buildings (standard) | Construction, repair, renovation or alteration of residential apartments and complexes, non affordable | 18% |
| 9954 | Works contract for affordable residential housing | Construction of residential apartments in notified affordable housing projects without input tax credit | 1% or 5% as per notification |
| 9954 | Works contract services for specified Government civil works | Construction of roads, bridges, pipelines, water and other infrastructure for Government or local authority | Often 12% concessional |
| 9954 | Other works contract services on immovable property | Residual works contract entries not covered by special concessions | Usually 18% |
HSN Code for Work Contracts and Civil Work
Inside the 9954 family there are many detailed sub codes that explain the type of construction service. For example, some sub codes cover residential buildings, some cover commercial buildings and some cover roads, bridges and other civil engineering work.
Civil work contracts for roads, bridges, pipelines and similar structures are also classified under 9954 but with different last digits. These sub codes help identify whether the service relates to buildings, industrial structures or large civil engineering projects.
In day to day billing, many contractors simply use 9954 or the six digit version allowed by the rules as their main work contract HSN code on tax invoices. Larger contractors and companies that handle many types of projects may map each project to a more exact eight digit code inside the 9954 family for better reporting.
The important point is that both building contracts and civil work contracts linked with immovable property are normally treated as works contract services in the 9954 group and should not be wrongly classified under codes meant for general maintenance or for sale of movable goods.
GST on Work Contracts and HSN Code Classification
GST on works contract services depends on the nature of the project and the type of customer. For many standard commercial and mixed use projects, the applicable GST rate on the value of the works contract service under 9954 is 18%.
Some projects enjoy lower effective rates. Affordable housing projects and certain residential real estate schemes may attract concessional rates such as 1% or 5% without input tax credit when they meet the conditions in the notifications. Some government contracts and special civil infrastructure projects can also come under 12% in specific cases.
Because there are many rate entries under 9954, contractors should not guess the rate. They should check which notification line applies to their project based on factors such as type of property, use of the building, whether the buyer is a government body and whether input tax credit is allowed.
For GST compliance, businesses configure the work contract HSN code 9954 in their accounting or billing software as a service item. Every tax invoice for works contract service shows this code, the taxable value, the applied GST rate and the GST amount. During return filing, outward supplies of works contract are reported with HSN wise summaries so that turnover under 9954 is clearly visible to the tax department.
On the recipient side, companies and builders who receive works contract services check that the supplier has used the correct 9954 code and GST rate. Where input tax credit is allowed by law they claim credit on the GST charged on these invoices, which makes accurate classification and correct rate selection very important.
Conclusion
The work contract HSN code is central to correct GST treatment of construction and civil projects. Most works contract services for buildings and civil structures are grouped under service code 9954, with detailed sub codes that describe the exact type of work.
When contractors and businesses map every works contract to the correct 9954 code and apply the right GST slab, usually 18% for standard commercial projects and lower rates only where the notifications clearly allow them, their invoices stay accurate and GST returns match the law. This helps avoid disputes, interest and penalties related to wrong classification or wrong GST rates on works contract services.
I am a Chartered Accountant with 5 years of experience specializing in GST, income tax, and HSN code classification. I help businesses with GST compliance, tax planning, and financial advisory, ensuring they meet regulatory requirements while optimizing their tax strategies. I aim to simplify GST filings, income tax laws, and HSN code classifications, helping professionals and business owners stay informed and compliant.
Frequently Asked Questions
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What is the HSN code for work contracts in India?
In India, most construction related works contract services linked with immovable property are classified under the service code 9954, which covers construction services under GST.
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How does the HSN code affect GST filing for work contracts?
Using the correct work contract HSN code 9954 ensures that works contract services are reported in the right service category, that the correct GST rate is applied and that outward supplies and input tax credit are captured correctly in GST returns.
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What is the HSN code for civil work contracts?
Civil work contracts for roads, bridges, pipelines and similar structures are also covered under the 9954 family, using specific sub codes meant for civil engineering works inside this construction services group.
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Are there different HSN codes for various types of work contracts?
Yes. Inside the 9954 group there are many sub codes that distinguish between residential buildings, commercial buildings, industrial buildings and other civil engineering and site preparation services. Every type of works contract is mapped to the closest matching sub code.
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How do businesses use the work contract HSN code for GST filing?
Businesses set 9954 as the HSN or service code for works contract items in their billing software, print this code and the GST rate on invoices and then report these supplies HSN wise in their GST returns so that tax on works contract services is properly declared and credit can be claimed where allowed.