GST on Construction Materials 2026
For builders, contractors and individual home builders, GST on construction materials is a major budget item. Since the GST 2.0 rate changes took effect on 22 September 2025, almost every construction material falls in either the 5% or the 18% slab, with bricks on their own 6% or 12% scheme. The old 12% and 28% slabs no longer apply to building materials, so quotations and cost sheets prepared on the earlier rates need to be reworked for FY 2026-27 projects.
This guide gives the rate-by-material reference with HSN codes under Notification 09/2025-Central Tax (Rate), the bricks notifications, the works contract rate, and the input tax credit (ITC) rules that decide whether that GST is a recoverable credit or a sunk cost.
What changed on 22 September 2025: cement moved from 28% to 18%, and marble, travertine and granite blocks moved from 12% to 5%. Paints, varnishes, putty and finished marble and granite were already at 18% (paints and putty since 27 July 2018, finished marble and granite since 15 November 2017), as were steel, tiles, sanitaryware, pipes, cables and glass. Sand and aggregate stayed at 5%. Bricks stayed on the special scheme introduced in April 2022.
GST Rates Table: Major Construction Materials
All rates below are the combined CGST plus SGST (or IGST) rate for supplies made on or after 22 September 2025. The schedule reference is to Notification 09/2025-Central Tax (Rate) dated 17 September 2025 unless stated otherwise.
Cement and Concrete
| Item | HSN | GST rate | Notes |
|---|---|---|---|
| Portland, aluminous, slag and other hydraulic cement | 2523 | 18% | Schedule II, S. No. 9. Was 28% until 21 September 2025 |
| Ready mix concrete (RMC) | 3824 | 18% | Schedule II, S. No. 110 |
| Concrete blocks, precast items, articles of cement or artificial stone | 6810 | 18% | Schedule II, S. No. 226 |
| Fly ash bricks, fly ash blocks, fly ash aggregates | 6815 | 12% or 6% | Bricks scheme, see below |
If you run a batching plant, our ready-mix concrete GST and income tax guide works through input credit per cubic metre, e-way bills for each load and the TDS builders deduct.
Steel and Metal
| Item | HSN | GST rate | Notes |
|---|---|---|---|
| TMT bars, reinforcement bars, rods of non-alloy steel | 7213 to 7215 | 18% | Schedule II, S. No. 268 |
| Angles, shapes and sections | 7216 | 18% | Schedule II |
| Fabricated steel structures, trusses, columns, shuttering | 7308 | 18% | Schedule II, S. No. 286 |
| Pipe fittings of iron or steel | 7307 | 18% | Schedule II, S. No. 285 |
| Screws, bolts, nuts, anchors | 7318 | 18% | Schedule II, S. No. 296 |
Bricks and Masonry
| Item | HSN | GST rate | Notes |
|---|---|---|---|
| Building bricks (red clay bricks) | 6904 10 00 | 12% with ITC, or 6% without ITC | Notification 14/2025-Central Tax (Rate) for 12%; Notification 02/2022-Central Tax (Rate) for the 6% no-credit option |
| Fly ash bricks, blocks and aggregates | 6815 | 12% with ITC, or 6% without ITC | Same two notifications. The 90% fly ash content condition in the 6% option was removed from 18 July 2022 (Notification 10/2022-Central Tax (Rate)) |
| Bricks of fossil meals | 6901 00 10 | 12% or 6% | Same scheme |
| Earthen or roofing tiles | 6905 10 00 | 12% or 6% | Same scheme |
| AAC blocks and other concrete blocks | 6810 | 18% | Schedule II, S. No. 226. Blocks that qualify as fly ash blocks fall under 6815 instead |
| Refractory bricks | 6902 | 18% | Schedule II |
The brick kiln scheme works like this: a supplier of building bricks, fly ash bricks, fossil-meal bricks or roofing tiles either pays 12% and claims ITC on inputs, or pays 6% and forgoes ITC. The 6% rate is a condition-based exemption, so the buyer should check which rate the supplier has charged. A buyer who is eligible for credit gets more credit from a 12% supplier, but pays a lower gross price to a 6% supplier.
Sand, Aggregate and Stone
| Item | HSN | GST rate | Notes |
|---|---|---|---|
| Natural sand, river sand, manufactured sand | 2505 | 5% | Schedule I, S. No. 166 |
| Pebbles, gravel, crushed stone, aggregate | 2517 | 5% | Schedule I, S. No. 182 |
| Marble and travertine blocks, crude or roughly trimmed | 2515 11 00, 2515 12 10 | 5% | Schedule I, S. Nos. 177 and 178. Blocks (2515 12 10) were 12% until 21 September 2025 |
| Granite blocks, crude or roughly trimmed | 2516 11 00, 2516 | 5% | Schedule I, S. Nos. 180 and 181. Granite blocks were 12% until 21 September 2025; crude granite was already 5% |
| Marble and travertine slabs and other finished forms | 2515 12 20, 2515 12 90 | 18% | Schedule II, S. No. 7. 18% since 15 November 2017 |
| Granite other than blocks (slabs) | 2516 12 00 | 18% | Schedule II, S. No. 8. 18% since 15 November 2017 |
| Worked monumental or building stone, polished stone articles | 6802 | 18% | Schedule II, S. No. 218 |
| Gypsum, plaster of Paris | 2520 | 5% | Schedule I, S. No. 185 |
Tiles and Flooring
| Item | HSN | GST rate | Notes |
|---|---|---|---|
| Ceramic tiles, vitrified tiles, wall and floor tiles, mosaic cubes | 6907 | 18% | Schedule II, S. No. 238 |
| Ceramic flooring blocks, filler tiles | 6904 (other than 6904 10 00) | 18% | Schedule II, S. No. 235 |
| Cement or terrazzo tiles | 6810 | 18% | Schedule II, S. No. 226 |
Paint and Coatings
| Item | HSN | GST rate | Notes |
|---|---|---|---|
| Paints and varnishes based on synthetic polymers, non-aqueous | 3208 | 18% | Schedule II, S. No. 50. 18% since 27 July 2018 |
| Paints and varnishes, water based (emulsions) | 3209 | 18% | Schedule II, S. No. 51. 18% since 27 July 2018 |
| Wall putty, glaziers' putty, resin cements, caulking compounds | 3214 | 18% | Schedule II, S. No. 56. 18% since 27 July 2018 |
Plumbing and Sanitary
| Item | HSN | GST rate | Notes |
|---|---|---|---|
| PVC, CPVC and UPVC pipes and fittings | 3917 | 18% | Schedule II, S. No. 118 |
| Plastic water tanks, builders' ware of plastics | 3925 | 18% | Schedule II, S. No. 126 |
| Ceramic sinks, wash basins, toilets, cisterns | 6910 | 18% | Schedule II, S. No. 240 |
| Steel pipe fittings | 7307 | 18% | Schedule II, S. No. 285 |
Electrical and Glass
| Item | HSN | GST rate | Notes |
|---|---|---|---|
| Insulated wires and cables | 8544 | 18% | Schedule II, S. No. 516 |
| Switches, MCBs, distribution boards | 8536 | 18% | Schedule II, S. No. 508 |
| LED lamps and other lamps | 8539 | 18% | Schedule II, S. No. 511 |
| Luminaires and light fittings | 9405 | 18% | Schedule II, S. No. 614 |
| Float glass, polished glass sheets | 7005 | 18% | Schedule II, S. No. 245 |
Aluminium and Wood
| Item | HSN | GST rate | Notes |
|---|---|---|---|
| Aluminium doors, windows, frames and structures | 7610 | 18% | Schedule II, S. No. 339 |
| Plywood, veneered panels | 4412 | 18% | Schedule II, S. No. 159 |
| Particle board, MDF, OSB | 4410 | 18% | Schedule II, S. No. 157 |
For HSN reporting on invoices and in GSTR-1, a business with aggregate turnover up to Rs 5 crore in the previous year needs at least 4-digit codes on B2B invoices, and a business above Rs 5 crore needs 6 digits on every invoice. Our HSN code guide for office supplies and packaging explains the digit rules in detail.
Works Contract: Material plus Labour
When a contractor supplies both materials and labour to build, renovate or repair immovable property, the whole contract is a works contract, which GST law treats as a single supply of service under heading 9954. The customer cannot split the bill into cement at 18% and sand at 5%. The entire contract value is taxed at the works contract rate.
| Supply | GST rate | Basis |
|---|---|---|
| Works contract for a private customer (house, factory, office, shop) | 18% | Notification 11/2017-Central Tax (Rate), S. No. 3 |
| Works contract for government, local authority or government entity | 18% | The earlier 12% entries were raised to 18% from 18 July 2022 |
| Earthwork-heavy government contracts and their sub-contracts, offshore oil and gas works | 18% | The last 12% entries, items (vii), (viii) and (x), moved to 18% from 22 September 2025 by Notification 15/2025-Central Tax (Rate) |
| Promoter selling affordable residential apartments before completion | 1% without ITC | Notification 03/2019-Central Tax (Rate) |
| Promoter selling other residential apartments before completion | 5% without ITC | Notification 03/2019-Central Tax (Rate) |
| Promoter selling commercial units in a project that is not a residential real estate project | 18% with ITC, on two-thirds of the price after the deemed land deduction | Notification 11/2017-Central Tax (Rate), item (if) |
So for a contractor, works contract is 18% across the board since 22 September 2025. There is no 12% works contract rate left.
Example: a contractor quotes Rs 10 lakh, material and labour, to build a house for an individual.
- Inputs bought by the contractor: cement at 18%, steel at 18%, bricks at 12% or 6%, sand at 5%, tiles and paint at 18%
- Output GST charged to the customer: Rs 10 lakh at 18% = Rs 1,80,000
- ITC: the contractor can claim credit on all materials because the output is a taxable works contract service. Section 17(5)(c) blocks ITC on works contract services only when they are used to construct your own immovable property, and carves out the case where they are an input for a further works contract supply.
- The homeowner, as the final consumer, cannot recover the Rs 1,80,000.
ITC Rules for Construction
The key provisions are clauses (c) and (d) of Section 17(5) of the CGST Act. The Finance Act 2025 amended clause (d) to read "plant and machinery" with retrospective effect from 1 July 2017, so the block applies to every building other than plant and machinery.
ITC blocked
- Materials and services for constructing your own building, even if the building is used for business: your own factory, office, warehouse, hotel or shop. Section 17(5)(d) blocks ITC on goods and services received "on his own account" for construction of immovable property, other than plant and machinery.
- Works contract services for your own building, under Section 17(5)(c).
- Residential projects sold by a promoter at 1% or 5%: the concessional rate is conditional on not taking ITC.
- Renovation, additions and repairs to the extent capitalised in the books. The explanation to Section 17(5) treats capitalised renovation as construction.
ITC available
- Contractors and sub-contractors: materials used to supply a taxable works contract service to a client, because the output is a taxable supply and clause (c) carves out input works contracts used for further works contract supply.
- Plant and machinery: foundations and structural supports for machinery are part of plant and machinery and are not blocked, but the explanation to Section 17 excludes land, buildings and other civil structures.
- Commercial projects under item (if): a promoter selling shops or offices in a project that is not a residential real estate project pays 18% with ITC.
- Revenue repairs and maintenance that are expensed, not capitalised.
- Builders selling only after the completion certificate: no GST is charged on the sale, so no ITC either. The input tax is simply a cost.
Key distinction: owning the building you construct means the GST on materials is a cost. Building it for someone else as a works contract means the GST on materials is a credit. See our ITC eligibility and GSTR-2B reconciliation guide for how to match supplier invoices before claiming.
Impact on Home Construction Cost
Scenario: a 1,000 sq ft house built after 22 September 2025, materials bought directly by the owner.
| Material | Cost before GST | Rate | GST | GST at pre-22 Sept 2025 rates |
|---|---|---|---|---|
| Cement | Rs 1,00,000 | 18% | Rs 18,000 | Rs 28,000 |
| Steel | Rs 2,00,000 | 18% | Rs 36,000 | Rs 36,000 |
| Bricks (12% supplier) | Rs 50,000 | 12% | Rs 6,000 | Rs 6,000 |
| Tiles | Rs 1,50,000 | 18% | Rs 27,000 | Rs 27,000 |
| Paint and putty | Rs 50,000 | 18% | Rs 9,000 | Rs 9,000 |
| Plumbing and electrical | Rs 75,000 | 18% | Rs 13,500 | Rs 13,500 |
| Total | Rs 5,75,000 | Rs 1,09,500 | Rs 1,19,500 |
Total cost with GST is Rs 6,84,500, against Rs 6,94,500 at the old rates, a saving of Rs 10,000 on this bill of materials, all of it from the cement rate cut. If the bricks come from a supplier on the 6% scheme, GST on bricks drops to Rs 3,000. For an individual owner none of this GST is recoverable, so it is part of the cost of the house.
Rate changes follow the time of supply rules in Section 14 of the CGST Act. Where goods were supplied and invoiced before 22 September 2025, the old rate stays on that invoice even if payment is made later.
Common GST Issues for Contractors
Issue 1: Claiming ITC on your own construction
Mistake: a business claims ITC on cement, steel and bricks used to build its own office or factory. Reality: Section 17(5)(d) blocks it, whether the building is residential or commercial. Only plant and machinery is carved out.
Issue 2: Charging material rates instead of the works contract rate
Mistake: a contractor invoices cement at 18% and sand at 5% separately under a single construction contract. Reality: a works contract is one service at 18%. Splitting the invoice does not change the rate, and a notice will recompute tax on the full value.
Issue 3: Buying from unregistered suppliers
Mistake: materials bought from informal vendors without a tax invoice to save on price. Reality: no tax invoice means no ITC, and no trail to defend the cost in a GST or income tax scrutiny. Compare prices after adding back the credit you lose.
Issue 4: Quoting on the old rates
Mistake: cost sheets and tender bids still built on 28% cement (or 28% paint, a rate that ended in July 2018). Reality: cement is 18% since 22 September 2025, and paint has been 18% since 27 July 2018. Rework estimates and check that supplier invoices dated on or after that date carry the new rate.
Key Takeaways for Builders and Contractors
- Two slabs cover most materials: 5% for sand, aggregate, stone blocks and gypsum; 18% for cement, steel, tiles, paint, sanitaryware, pipes, cables, glass, aluminium and wood products.
- Bricks are the exception: 12% with ITC or 6% without ITC under the brick kiln scheme.
- Works contract is 18%: material plus labour is one service, and the 12% works contract entries ended on 22 September 2025.
- ITC depends on who owns the building: contractors claim it, owners building for themselves do not, promoters selling flats at 1% or 5% do not.
- HSN codes matter: use 4 or 6 digits as your turnover requires, and the right heading, so the rate on the invoice can be defended.
- Reconcile before you claim: match material invoices with GSTR-2B every month. Tax Garden handles GST return filing for contractors and builders, and our income tax guide for contractors and sub-contractors covers the TDS and presumptive tax side.
Notification No. 09/2025-Central Tax (Rate) dated 17 September 2025 (goods rate schedules, effective 22 September 2025); Notification No. 14/2025-Central Tax (Rate) dated 17 September 2025 (12% rate on bricks); Notification No. 02/2022-Central Tax (Rate) dated 31 March 2022 (6% rate on bricks without ITC); Notification No. 15/2025-Central Tax (Rate) dated 17 September 2025 amending Notification No. 11/2017-Central Tax (Rate) (works contract items (vii), (viii) and (x) to 18%); Notification No. 03/2022-Central Tax (Rate) dated 13 July 2022 (government works contracts to 18%); Notification No. 03/2019-Central Tax (Rate) dated 29 March 2019 (1% and 5% real estate rates without ITC); Notification No. 41/2017-Central Tax (Rate) dated 14 November 2017 (finished marble and granite to 18%); Notification No. 18/2018-Central Tax (Rate) dated 26 July 2018 (paints, varnishes and putty to 18%); Section 17(5)(c) and (d) and Section 14 of the CGST Act, 2017; Notification No. 78/2020-Central Tax (HSN digit requirements).
