The Goods and Services Tax (GST) was introduced to simplify the tax regime. It came into effect on July 1, 2017, subsuming all the different taxations across multiple industries into one. However, manufacturers, developers, and even homeowners still struggle with calculating GST on construction raw materials since all the resources fall under different GST slabs, making the process complicated.
In this article, 99acres has provided an in-depth account of the most common construction materials and their ongoing GST rates in 2024 to give property owners more clarity on this matter.
GST on construction materials: 2024 rate chart
Different construction materials have been segregated under various tax slabs and attract taxes ranging from five percent to 28 percent. The table below further details the ongoing GST rate on different construction material types.
| Construction material | GST rate |
|---|---|
| Natural Sand | 5% |
| Building bricks, Fossil bricks | 5-28% |
| Fly-ash bricks | 5% |
| coal | 5% |
| Glass based paving blocks | 18% |
| Pebble, gravel and crushed stone | 5% |
| Marble and granite blocks | 12-28% |
| Building stones | 5% |
| Cement | 28% |
| Iron and steel products | 18% |
| Tiles (Earthen, roofing) | 5% |
| Wall tiles | 28% |
| Bamboo floor tiles | 18% |
| Artificial stone, cement, concrete tiles | 5-28% |
| Wiring and electrical fittings | 18-28% |
| Paint and varnish | 18% |
| Pipe fittings | 18% |
| Ceramic goods and refractory bricks | 18% |
| Wallpapers | 28% |
| Locks | 18% |
| Sanitary wares | 18-28% |
Source: Secondary
It is important to note that the GST rates displayed above may vary on a case-to-case basis or as per new revision rates. Please consult official sources for more up-to-date information.
GST rates on different construction material components
The following section provides a comprehensive overview of the various types of construction materials such as for sand, bricks, pebbles, cement, iron, steel, and murum soil, along with their current GST rates and classifications.
What is the GST rate on sand and bricks in 2024?
Natural sand of all kinds, whether coloured or non-coloured (other than metal-bearing sand), fall under Chapter 26 of the HSN code and bears the GST rate of five percent. However, classifications such as bituminous or oil shale and tar sands, bitumen and asphalt, natural asphaltites and asphaltic rocks attract a GST of 18 percent.
Did you know? HSN Code refers to the 'Harmonised System of Nomenclature', which is a global system introduced to classify all goods systematically. HSN is recognised by its unique 6-digit codes that classify over 5000 products.
Moving on to the GST rate for different types of bricks, the bracket usually varies between five percent and 28 percent. For instance, building bricks and other bricks of fossil meals and other siliceous earth attract a GST of five percent, while multicellular foam glass in blocks or panels attracts a GST of 28 percent. Here are some more construction brick types and their GST rates.
GST on fly ash bricks
Fly ash bricks are popular building materials that save energy, reduce mercury pollution and cost almost 20 percent less than traditional clay brick manufacturing. These bricks attract five percent as GST.
GST on prefabricated components
Properties made of cement, artificial stone or concrete (reinforced or not), flagstone, building blocks, cemented bricks, including prefabricated components for building construction, attract a GST of 28 percent.
GST on paver block
Glass-based paving blocks, including squares, tiles, slabs, objects of pressed glass (wired or not) used in the construction process, glass cubes and small glassware for decorative purposes, including leaded lights, foam glass used in blocks, plates, panels or objects of a similar kind, attract a tax of 28 percent.
What is the GST on building stones, gravels, granite and marbles in 2024?
GST on building stones like basalt, sandstone, porphyry and other sandstones and building stones attract a GST of five percent. Similarly, GST rate levied on pebbles, gravels and crushed stones used in concrete is five percent. The following categories are included-
- Articles like limestone, limestone flux and other calcareous substances used in cement manufacturing.
- Materials like gravels, broken or crushed stones, pebbles used for concrete aggregates, railways, ballast, road metalling, shingle and flint (heat-treated or not), macadam of slag, dross or identical industrial waste, tarred macadam, powder of stones and cheeping granules.
There are two types of applicable GST rates for marble and granite. For example, GST on marble and granite blocks is 12 percent, whereas GST on anything marble and granite that is not in blocks attracts a 28 percent rate.
What is the GST rate for iron, steel, and cement in 2024?
Different types of cement, such as super sulphate, slag, aluminous, and Portland cement (coloured/clinker), attract a standard GST rate of 28 percent. However, refractory cement, mortars, and concrete will attract an 18 percent tax, while cement-bonded particle board will attract a 12 percent GST.
In the last couple of years, cement prices have spiked in the backdrop of rising logistics costs. Across India, cement rates have gone up by 10-15 percent, which has further increased construction costs for all independent contractors, owners and developers. This coupled with high cement GST rate has impeded the progress of real estate projects.
| Construction Material | GST Rate |
|---|---|
| Super Sulphate Cement | 28% |
| Slag Cement | 28% |
| Aluminous Cement | 28% |
| Portland Cement | 28% |
| Refractory Cement | 12% |
| Mortars | 12% |
| Concrete | 12% |
Source: Secondary
Lastly, all iron and steel products, including rods, wires, blocks, and rolls, attract a uniform GST rate of 18 percent.
What is the GST rate on Murum Soil?
Murum or Muram is a crucial element in construction. It is a mixture of organic matter, minerals, rock particles, gravel, etc. It is used for various construction purposes, such as plinth filling, backfilling in trenches, road pavements, and footing pits. Since it can be used efficiently to construct hard surfaces and does not contain organic matter, it is a suitable soil option for construction purposes. The material attracts an 18 percent GST, which is similar to lime powder, expensive mortar and refractory castable.
GST rates on interior furnishing materials in 2024
When calculating the construction cost, one must also factor in the interior decoration costs. This includes the usage of any interior furnishing materials, such as different tile types, wallpaper designs, copper wires, bathroom furniture and fittings, electrical fittings, and more. Here is a detailed overview of the GST rates applicable to different interior furnishing components.
GST rate for Tiles and wood in 2024
Similar to bricks, tiles attract a GST between five percent and 28 percent. For instance, earthen or roofing tiles attract a five percent GST while bamboo tiles are taxed at 18 percent GST. Apart from that, all other tile materials fall under the 28 percent GST slab. They are classified as follows-
- Glazed ceramic flags, paving, or wall tiles.
- Plastic floor covering (self-adhesive or not), in rolls or tiles form, or plastic wall coverings.
- Articles made of vegetable fibre or straw or of shavings like panels, boards, blocks, tiles, sawdust or other waste.
- Articles of wood reinforced with cement, plaster and similar mineral binder.
- Plaster, along with compositions based on plaster like sheets, tiles, panels, boards and unornamented articles.
- Tiles of artificial stone or cement.
- Flooring blocks made of ceramic, filler, and support tiles.
- Pavings and flags made of ceramic, wall tiles, mosaic cubes of ceramic (on a backing or not), including finishing ceramics.
Wood, be it natural or artificial, is yet another commonly used material in interior furnishing. Based on the type of wood chosen, the material will attract a 12-28 percent GST. For instance-
- All types of natural wood and wooden material attract 28 percent GST.
- Plywood used in wooden furniture also attracts 28 percent tax.
- Finished wooden furniture attracts 12 percent GST. Business owners can also claim an Input Tax Credit (ITC) of GST on the purchase of new ready-to-use furniture.
GST on copper wire and other electrical fittings
The tax rate for insulated concealed wires and cables is 28 percent. Electrical machinery and equipment, sound recording instruments, TV audio and video recorders and reproducers, and their parts and accessories are also taxed in the same bracket.
GST on wallpapers, paint and varnish
For interior products like wallpapers or wall coverings, the GST rate is between 18 percent and 28 percent. In the case of interior decor such as paintings and other similar items, the GST rate is fixed at 28 percent.
Paints and varnishes with enamels and lacquers, including chemically modified natural and synthetic polymers, are taxed at 18 percent GST. In addition to these, resin cement, glazier’s putty, grafting putty, and mastics, including painter’s filling, surfacing material for facades, floors, ceilings, and indoor walls are also taxed at 18 percent.
GST on bathroom fittings and interior accessories
Sanitaryware fittings usually range between 18 and 28 percent. Here's a breakdown of the different bathroom fitting components-
- Bathroom furnishing materials like ceramic sinks, washbasins and their pedestals, bidets, closet pans, urinals and cisterns, and sanitary fixtures of a similar kind are levied GST at 28 percent, except pipe fittings. The GST rate for such pipes is 18 percent.
- Parts of iron and steel used in sanitary ware are taxed at 28 percent.
- Pipe fittings and tubes, including copper, plastic, nickel, aluminium, iron or steel, attract a GST of 18 percent. However, regular plastic pipes and hoses attract just 5 percent GST.
Interior accessories, such as locks (combination, key or electrical) or padlocks, are taxed at 18 percent. However, articles used for furniture, doors, windows and blinds, including base metal mountings and fittings, are taxed at 28 percent.
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GST rates on construction services: 2024 rate chart
Construction services such as works contracts, labour contracts, and other contractual services attract GST of 12 to 18 percent. However, GST rates may vary according to property type and budget. Here is a breakdown of the construction services and their GST rates.
What is a works contract?
A works contract is an agreement drawn between the contractor and the contractee or the property owner. The document details all the necessary information regarding the construction activity, including building, fabrication, construction, installation, improvement, repair, and maintenance. It also mentions details like the work timings, working days, and the amount payable, among other information. Like any other contract, it must be executed for validity and successful completion of the task.
| Works Contract Services | GST Applicable |
|---|---|
| Contractor supplies the raw materials | 12% |
| Contractor supplies labour and owner supplies raw materials | 18% |
| Good's value is less than 25% of the contract value | 18% |
| Good's value is more than 25% of the contract value | 18% |
Source: Secondary
What is a labour contract?
A labour contract is a document that specifies the terms and conditions under which the workforce employed at a construction site works. The contract, executed between the contractor and owner, mentions the agreed-upon working conditions, material requirements, and the scope of work, to name a few details.
| GST on Construction Services | Applicable Rate |
|---|---|
| Labour and Contractor Services | 12% |
| Architectural and Design Services | 18% |
Source: Secondary
What are the GST rates on real estate projects?
It is important to note that GST is only applicable to under-construction properties. Property owners moving into ready-to-move properties are exempt from this taxation, although other taxes such as stamp duty and registration charges may apply.
| Type of projects | GST rate |
|---|---|
| Affordable housing | 1% without ITC |
| Non-affordable housing | 5% without ITC |
| Commercial | 12% with ITC |
Source: Secondary
Note: The government has also revised the definition of affordable housing in this context, which now includes properties with a carpet area not exceeding 60 sq m in metropolitan cities and 90 sq m in non-metropolitan cities of India.
GST was a revolutionary change in the Indian tax system, perceived as both a boon and a bane. It has evolved over the years, and yet there are possibilities for improvements. In 2019, GST on construction cost of residential properties was revised, which came into effect in April 2019.
At present, the GST rate on under-construction properties is five percent without the benefit of Input Tax Credit (ITC). However, this tax percentage is subject to change based on the project's type and the state. For affordable houses, i.e. properties priced within Rs 45 lakh, the GST rate is one percent without ITC. The GST rate for commercial properties is 12 percent, with ITC benefits.
GST rate on goods transportation for real estate
The transportation of goods carrying construction material where the cost of fuel is included will now attract five percent GST. The operators have the flexibility to opt for GST at five percent without input tax credit (ITC) or 12 percent with ITC. The option to switch will be available at the beginning of the financial year.
To conclude, the GST regime marks a significant milestone in India's tax history. While it has simplified the tax system, continuous improvements and collaborative efforts are essential moving forward. However, property owners or investors purchasing under-construction properties should consult a tax expert or local contractor for a more accurate estimate of the GST payable before finalising any construction contracts.
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