To subsume almost all indirect taxes in India, except for a few state taxes, the government in 2017 launched the Goods and Services Tax (GST) regime that is in line with globally-accepted tax regimens.
The Goods and Services Tax (GST) covers real estate in India through works contracts and building and constitution works as all components used in the development work attract GST. To put it simply, covered under the new regime is the Indian construction industry, which continues to attract high rates of taxes through a blend of levies imposed on the purchase of various building construction materials.
Check out our guide on GST search and GST verification
GST on construction, building materials
GST is a four-tier tax builders in India have to pay on purchase of construction and building material. The GST rate on construction materials and building materials ranges between 5% and 28%.
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GST on construction and building materials 2025
Construction materials fall under various GST tax slabs, ranging from 5% to 28%. The table below outlines the current GST rates for different types of construction materials.
| 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% |
Also read: GST portal login
Sand GST rate
5%: Natural sand of all kinds other than metal-bearing sand.
18%: Bituminous or oil shale and tar sands, bitumen and asphalt, natural asphaltites and asphaltic rocks.
Cement GST rate
| Construction Material | GST Rate |
| Super Sulphate Cement | 28% |
| Slag Cement | 28% |
| Aluminous Cement | 28% |
| Portland Cement | 28% |
| Refractory Cement | 12% |
| Mortars | 12% |
| Concrete | 12% |
GST on bricks
5%: Building bricks and other bricks of fossil means and other siliceous earth or fly-ash bricks.
GST on supply of bricks hiked to 12%
In a move that will eventually increase the cost of property, the GST Council decided to increase the tax on supply of bricks to 12% with ITC benefits. This GST hike on supply of bricks will come into effect from April 1, 2022.
“Brick kilns would be brought under a special composition scheme with a threshold limit of Rs 20 lakhs, with effect from April 1, 2022. Bricks would attract GST at the rate of 6% without input tax credit under the scheme. GST rate of 12% with ITC would otherwise apply to bricks,” the GST Council said after its meeting on September 17, 2021, in Lucknow, UP.
18%: Tile, refractory bricks and ceramic goods.
28%: Materials made of cement, artificial stone or concrete like brick, flagstone, building blocks, cemented bricks, including prefabricated components for building construction; glass-based paving blocks, including squares, tiles, slabs, objects of pressed glass used in the construction process, glass cubes and small glass wares for decorative purposes, including leaded lights, foam glass used in blocks, plates and panels, etc.
See also: How to get a home construction loan, to construct your own house
GST on gravel and crushed stone
Building stones such as basalt, sandstone, porphyry, and other similar materials are taxed at a 5% GST rate. Likewise, pebbles, gravel, and crushed stones used in concrete also attract a 5% GST.
GST on marble and granite
Marble and granite have two applicable GST rates. Marble and granite blocks are taxed at 12%, while any marble or granite products that are not in block form attract a 28% GST.
GST rate on building stone
5%: Porphyry, basalt, sandstone and other monumental or building stone, both, in blocks and slabs.
GST rate on muram soil
Murum soil, also known as Muram, plays a vital role in construction. It is a blend of minerals, rock particles, gravel, and other components, commonly used for plinth filling, trench backfilling, road pavements, and footing pits. Known for creating hard surfaces and being free from organic matter, it is ideal for various construction needs. The GST rate on Murum soil is 18%, similar to that applied to materials like lime powder, mortar, and refractory castable.
GST on steel
All iron and steel products, including rods, wires, blocks, and rolls, are subject to a uniform GST rate of 18%.
GST rate for tiles
| Construction material | GST Rate |
| Earthen or roofing tiles | 5% |
| Bamboo flooring tiles | 18% |
| Cement tiles | 28% |
| Concrete tiles | 28% |
| Artificial stone tiles | 28% |
| Plastic floor coverings (in rolls or tiles) | 28% |
| Plastic wall or ceiling coverings | 28% |
| Panels, boards, tiles, blocks (vegetable fibre, straw, wood particles with mineral binders) | 28% |
| Ceramic flooring blocks | 28% |
| Support or filler tiles | 28% |
| Articles of plaster (boards, sheets, panels, tiles) | 28% |
| Hearth or wall tiles | 28% |
| Ceramic mosaic cubes | 28% |
| Glazed ceramic flags and paving | 28% |
| Glazed hearth or wall tiles | 28% |
| Glazed ceramic mosaic cubes | 28% |
GST on coal
The Indian government has eased the tax burden on coal producers by placing coal in the 5% GST tax bracket.
See also: All about the National Building Code
GST rates on interior furnishing materials in 2025
When budgeting for construction, including the cost of interior decoration materials is crucial. Here’s a breakdown of GST rates for various interior furnishing components:
Tiles
- Earthen or roofing Tiles: 5%
- Bamboo tiles: 18%
- Other tiles (e.g., Glazed Ceramic, Plastic, Ceramic Flooring Blocks, Artificial Stone): 28%
Wood
- Natural wood & plywood for furniture: 28%
- Finished wooden furniture: 12% (Input Tax Credit available)
Copper wire and electrical fittings
- Insulated concealed wires & cables: 28%
- Electrical machinery & equipment, sound recording instruments, TV audio & video recorders: 28%
Wallpapers, paints, and varnishes
- Wallpapers & wall coverings: 18% to 28%
- Paints & varnishes (enamels, lacquers, chemically modified polymers): 18%
- Resin cement, glazier’s putty, painter’s filling materials: 18%
Bathroom Fittings:
- Ceramic sinks, washbasins, Bidets, Closet Pans, Urinals: 28% (except pipe fittings)
- Pipe fittings (copper, plastic, nickel, aluminum, iron, steel): 18%
- Plastic pipes & hoses: 5%
- Iron & steel parts in sanitary ware: 28%
Interior Accessories:
- Locks (combination, key, electrical), padlocks: 18%
- Furniture, door, window, blind fittings (base metal): 28%
GST rates on construction services in 2025
Construction services involve various types of contracts and labor arrangements, each with different GST rates. Here’s a detailed breakdown of the GST rates applicable to different construction services and contracts.
Works contract
A works contract is an agreement between a contractor and a property owner detailing construction activities such as building, installation, repair, and maintenance. It includes work schedules, payment details, and the scope of work. The GST rates for works contracts are:
- Contractor supplies raw materials: 12%
- Contractor supplies labour, owner supplies raw materials: 18%
- Goods value less than 25% of contract value: 18%
- Goods value more than 25% of contract value: 18%
Labour contract
A labour contract specifies the terms for employing a workforce at a construction site. It includes working conditions, material requirements, and the scope of work. The GST rates for labour contracts are:
- Labour and contractor services: 12%
- Architectural and design services: 18%
GST rate on goods transportation for real estate
Transportation of construction materials, including fuel costs, is now subject to a 5% GST rate. Operators can choose between applying GST at 5% without input tax credit (ITC) or at 12% with ITC. This choice can be made at the start of the financial year.
In summary, the GST regime represents a significant shift in India’s tax system, offering greater simplicity. However, ongoing improvements and collaborative efforts are essential for its continued effectiveness. Property owners or investors purchasing under-construction properties should consult a tax expert or local contractor to obtain a precise estimate of the GST liabilities before finalising any construction agreements.
GST rates on real estate projects
GST applies only to under-construction properties. Property owners who move into ready-to-move-in properties are exempt from GST, though they may still be subject to other taxes such as stamp duty and registration charges.
GST rates by project type
- Affordable housing: 1% without ITC
- Non-affordable housing: 5% without ITC
- Commercial properties: 12% with ITC
Note: The definition of affordable housing has been updated. It now includes properties with a carpet area not exceeding 60 sq m in metropolitan cities and 90 sq m in non-metropolitan cities across India.
GST has been a significant shift in India’s tax system, seen as both beneficial and challenging. While it has evolved since its introduction, there is still room for improvement. In April 2019, GST rates for residential construction costs were revised.
Currently, the GST rate for under-construction properties is 5% without itc. This rate varies depending on the type of project and state regulations. For affordable housing—properties priced within ₹45 lakh—the GST rate is 1% without itc. For commercial properties, the GST rate is 12% with itc benefits.
How does GST affect the overall cost of construction?
Implementing the goods and services tax (GST) in India has significantly influenced the construction sector by altering the tax landscape for various building materials and services. Here’s how GST affects the overall cost of construction:
Unified tax structure: Before GST, the construction industry was subject to multiple indirect taxes, including VAT, service tax, and excise duty, leading to a cascading effect of taxes. GST has streamlined these into a single tax system, reducing the complexity and potential for double taxation.
Input tax credit (ITC): GST allows the seamless flow of input tax credits across the supply chain. Builders and contractors can now claim credits for the GST paid on inputs like cement, steel, and other materials, which can offset their output tax liability. This mechanism helps reduce the overall tax burden and can lead to cost savings.
Impact on material costs: The GST rates for construction materials vary, with essential items like cement taxed at 28% and steel at 18%. While some materials have seen a tax rate increase under GST, the availability of ITC can mitigate these costs. However, the net effect on construction costs depends on the proportion of materials used and the efficiency in utilizing ITC.
Cost implications for different projects: For affordable housing projects, GST is levied at a reduced rate of 1% without ITC, making such projects more financially viable. In contrast, other residential projects attract a 5% GST without ITC, which can increase the cost for buyers. Commercial properties are taxed at 12% with ITC, allowing developers to offset some of the tax liabilities through input credits.
Compliance and cash flow management: The GST regime necessitates strict compliance with tax filings and documentation. While ITC offers tax relief, it requires timely and accurate record-keeping. Delays in claiming ITC can impact cash flows, especially for large-scale construction projects.
Are there any GST rebates or exemptions for eco-friendly construction materials?
Yes, the Indian government offers certain Goods and Services Tax (GST) concessions to promote the use of eco-friendly construction materials:
- Solar panels and systems: Solar panels are taxed at a GST rate of 12%. This rate was established to encourage the adoption of solar technology while maintaining a reasonable tax revenue stream for the government.
- Fly ash bricks: To promote sustainable building practices, fly ash bricks benefit from a reduced % GST rate of 12%.
FAQs
What is the rate of the GST on steel?
From July 1, 2017 the rate of GST for steel is 18%. The GST rate for some of the input used by the steel industry like iron, coal and transportation services is 5%.
Types of cement are classified under which code of the GST?
Types of cement are classified under chapter 25 of the HSN Code.
What GST rate applies to bricks?
Bricks are taxed at 5% GST. However, the GST on supply of bricks was increased to 12% with input tax credit (ITC) from April 1, 2022.
How are construction materials taxed under GST?
Construction materials are taxed at varying rates under GST, ranging from 5% to 28%, depending on the type of material. For example, cement is taxed at 28%, while natural sand is taxed at 5%.
What is the GST rate for affordable housing projects?
The GST rate for affordable housing projects is 1% without ITC. This applies to properties priced within ₹45 lakh.
How does GST apply to transportation of construction materials?
Transportation of construction materials is taxed at 5% GST. Operators can choose between 5% GST without ITC or 12% GST with ITC at the start of the financial year.
