GST on Construction Materials 2026
For builders, contractors, and individual home builders, GST on construction materials is a major budget item. GST adds 5-28% to material costs depending on type. Knowing the exact rates for cement, steel, bricks, sand, tiles, and paint helps you budget accurately for FY 2026-27 projects.
This guide provides rate-by-material reference, HSN codes, ITC eligibility, and RMC (Ready Mix Concrete) rules for contractors.
GST Rates Table: Major Construction Materials
Cement & Concrete
Steel & Metal
Bricks & Masonry
Sand & Aggregate
Tiles & Flooring
Paint & Coatings
Plumbing & Sanitary
Electrical & Glass
Aluminium & Wood
ITC (Input Tax Credit) Rules for Construction
Critical rule: ITC on construction materials used for residential property construction is BLOCKED.
ITC BLOCKED (No credit available):
- Residential flat/house construction (own use)
- Apartment society construction
- Any construction for personal residential use
ITC AVAILABLE (Credit available):
- Factory construction (business use)
- Office building (business use)
- Commercial complex (lease/rent for business)
- Hotel/hospitality construction
- Industrial sheds
- Builder/contractor building under-construction properties for sale
- Repairs and renovation of commercial property
Key distinction: If you are a builder selling flats, ITC is available on input materials (cement, steel, bricks) because output is taxable supply (sale of flats at 12% or 5%). After OC (Occupation Certificate), supply becomes exempt (no ITC on inputs).
Composite Supply (Material + Labour)
When a contractor provides both materials AND labour, it is a works contract service at 12% GST (or 18% for complex projects), NOT itemized material rates.
Example:
- Contractor quotes: Rs 10 lakh for labour + materials to build a house
- Input GST breakdown: Cement 28%) + Steel 18%) + Bricks 12%) + Labour 18%)
- Output GST: Charged at 12% works contract rate, not composite of inputs
- ITC: If residential, ITC is BLOCKED on all inputs
Important: Buyer cannot separate material from labour and claim different rates. It is a single composite service taxed at works contract rate.
HSN Code Reference (Top 15)
Keep these HSN codes handy for GST return filing:
- Cement (Portland, aluminous): 2523 28% GST)
- Sand & gravel: 2505 5% GST)
- Marble slabs: 2515/2516 28% GST)
- Clay bricks: 6901 12% GST)
- Ceramic tiles: 6907 18% GST)
- AAC blocks: 6810 12% GST)
- Sanitary ware: 6910 18% GST)
- Float glass: 7005 18% GST)
- Steel bars/rods: 7213/7214 18% GST)
- Structural steel: 7308 18% GST)
- Aluminium doors/windows: 7610 18% GST)
- Electrical cables: 8544 18% GST)
- Plywood: 4412 18% GST)
- PVC pipes: 3917 18% GST)
- Paint: 3208/3209 28% GST)
Impact on Home Construction Cost
Scenario: Building 1,000 sqft house
Estimated material cost breakdown (before GST):
- Cement: Rs 1 lakh → GST Rs 28,000
- Steel: Rs 2 lakh → GST Rs 36,000
- Bricks: Rs 50,000 → GST Rs 6,000
- Tiles: Rs 1.5 lakh → GST Rs 27,000
- Paint: Rs 50,000 → GST Rs 14,000
- Plumbing/electrical: Rs 75,000 → GST Rs 13,500
- Total material cost: Rs 5.75 lakh
- Total GST (if ITC available): Rs 1,24,500
- Total with GST: Rs 6,99,500
But: ITC is BLOCKED for residential. Builder/contractor absorbs GST cost. Final price to homeowner includes GST as non-deductible cost.
Common GST Issues for Contractors
Issue 1: Claiming ITC on residential construction
Mistake: Contractor claims ITC on cement, steel, bricks for residential house construction. Reality: ITC blocked for residential; can only claim on commercial/business properties.
Issue 2: Not separating material and labour in invoice
Mistake: Single invoice shows "labour + material" without itemization. Reality: AO may disallow ITC on labour portion (labour is typically 18%, material varies). Itemize invoice to preserve ITC on materials.
Issue 3: Buying from non-GST suppliers
Mistake: Contractor purchases materials from informal/non-registered vendors to save cost. Reality: Cannot claim ITC on purchases without valid tax invoice. Contractor bears full GST cost.
Key Takeaways for Builders & Contractors
- Cement is most expensive: 28% GST is the highest rate; consider alternative materials if available.
- ITC blocked for residential: Plan for GST as non-recoverable cost on home construction.
- ITC available for commercial: Commercial property construction gets full ITC; cost savings justify registration.
- Works contract at 12%: Material + labour composite is 12% GST, not sum of itemized rates.
- HSN codes matter: Use correct HSN on invoices to support ITC claims and avoid notices.
- RMC GST is complex: Ready mix concrete may be subject to different GST slab depending on composition; negotiate carefully.
Frequently Asked Questions
I am building a residential house. Do I pay 28% GST on cement or can I claim ITC to reduce it?
You pay full 28% GST on cement. ITC is blocked for residential construction, you cannot credit this GST. Plan this as a project cost, not tax-deductible.
Contractor quoted Rs 50 lakh for material + labour. What is the GST rate?
If it is a single composite supply (material + labour bundle), GST is 12% as a works contract service, i.e., Rs 6 lakh GST. The contractor cannot itemize material 18%) and labour 18%) separately once quoted as composite.
I bought steel from a non-registered vendor (no GST invoice). Can I claim ITC?
No. ITC requires a valid tax invoice from a GST-registered supplier. Purchase without invoice = no ITC available. Always buy from registered vendors.
I am a builder selling under-construction flats. Is ITC available on cement/steel I purchased?
Yes. ITC is available on inputs for under-construction property sales (taxable supply at 12% or 5%). After OC, flats become exempt supply; no further ITC.
Sand is 5% GST. Cement is 28%. Can I blend them to reduce GST?
No. Each material has its own GST rate based on HSN code. You cannot average rates or claim lower rate for higher-GST material. File GSTR One with individual rates per HSN.
GST Rate Schedule (Notification Nos 1/2017-CT and amendments); HSN code classifications (Ministry of Commerce); CBDT Rule 17 5) on ITC blocking for residential property; Composite supply norms for works contracts (Department of Revenue).
