Looking for expert help with GST and income tax for brick kiln owners India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Building bricks, fly ash bricks and blocks, and roofing tiles are 12% GST with input tax credit (Notification 14/2025-Central Tax (Rate)), or 6% GST if you give up the credit (Notification 02/2022-Central Tax (Rate)).
- Bricks were kept out of the Rs 40 lakh goods limit. A kiln must register once turnover crosses Rs 20 lakh (Rs 10 lakh in some north-eastern States).
- Brick manufacturers can't opt for composition (Notification 04/2022-Central Tax). The 6% no-credit rate replaces it.
- From 1 April 2026, TCS on coal is 2%, but a kiln burning coal to make bricks can give the seller a declaration and avoid it (Section 394(2), Income-tax Act 2025).
- Section 44AD deems 6% of digital receipts and 8% of cash receipts as profit. Cash-heavy kilns pay more tax under it.
What is the GST rate on bricks for a brick kiln? Building bricks (HSN 6904 10 00), fly ash bricks and blocks (6815), fossil-meal bricks (6901 00 10) and earthen or roofing tiles (6905 10 00) are taxed at 12% GST from 22 September 2025 under Notification 14/2025-Central Tax (Rate). A kiln that takes no input tax credit on its inputs can charge 6% instead, under Notification 02/2022-Central Tax (Rate).
A brick kiln is a seasonal, cash-heavy business that buys a lot of coal and pays a lot of labour. Bricks also sit on their own GST track. They're one of the few goods still at 12% after the September 2025 rate changes, they have a separate 6% option, and they're excluded from both the higher registration limit and the composition scheme. This guide covers the GST choices, the income tax rules on coal, labour and cash, and how presumptive tax works for a kiln. Dealers who buy bricks for resale should also read our cement, steel and building material dealers guide.
Which bricks are 12% and which can go to 6%?
The same four entries appear in both notifications, so every item on the 12% list can also use the 6% option. Refractory bricks are different: they're under heading 6902 in Schedule II of Notification 9/2025-Central Tax (Rate), at 18%.
Comparison
GST on Bricks and Tiles from 22 September 2025
| Item | HSN | With input tax credit | Without input tax credit |
|---|---|---|---|
| Building bricks (red clay bricks) | 6904 10 00 | 12% | 6% |
| Fly ash bricks, fly ash blocks, fly ash aggregates | 6815 | 12% | 6% |
| Bricks of fossil meals or similar siliceous earths | 6901 00 10 | 12% | 6% |
| Earthen or roofing tiles | 6905 10 00 | 12% | 6% |
| Refractory bricks and blocks | 6902 | 18% | No 6% option |
Source: Notifications 14/2025-Central Tax (Rate), 02/2022-Central Tax (Rate) as amended by 10/2022-CT(R), 9/2025-Central Tax (Rate) Schedule II S. No. 233
On an intra-State sale, 12% is 6% CGST plus 6% SGST, and the 6% option is 3% CGST plus 3% SGST. For a sale to another State, you charge 12% IGST, or 6% IGST under Notification 02/2022-Integrated Tax (Rate) if you don't take credit.
For fly ash products, the 6% option no longer needs 90% fly ash content. Notification 10/2022-Central Tax (Rate) replaced that wording with "Fly ash bricks; Fly ash aggregates; Fly ash blocks" from 18 July 2022.
Should your kiln charge 12% or 6%?
The 6% rate comes with a condition. You can't take input tax credit (ITC) on goods and services used only for these bricks. If an input is shared with another taxable supply, you reverse the credit on it as if the bricks were exempt (Section 17(2), CGST Act).
So the choice depends on how much GST you pay on inputs. Coal is 18% (Notification 9/2025-Central Tax (Rate), Schedule II, heading 2701). Wages carry no GST. Clay dug from your own land carries none either.
Here's the rule of thumb. If the GST on your inputs is more than 3% of your brick sales value, 12% with credit costs you less. If it's below 3%, the 6% rate costs you less.
Kiln A (buys coal on GST bills): taxable sales of Rs 60,00,000 in the year. It buys Rs 20,00,000 of coal plus 18% GST of Rs 3,60,000.
- At 12%: output tax Rs 7,20,000, less ITC Rs 3,60,000. Total GST cost: Rs 3,60,000.
- At 6%: output tax Rs 3,60,000, plus Rs 3,60,000 of coal GST it can't recover. Total GST cost: Rs 7,20,000.
- 12% is cheaper by Rs 3,60,000.
Kiln B (low GST on inputs): the same Rs 60,00,000 of sales, but its GST-billed inputs carry only Rs 60,000 of GST.
- At 12%: Rs 7,20,000 less Rs 60,000 = Rs 6,60,000.
- At 6%: Rs 3,60,000 plus Rs 60,000 lost = Rs 4,20,000.
- 6% is cheaper by Rs 2,40,000.
At exactly 3% (Rs 1,80,000 of input GST on Rs 60 lakh of sales), both routes cost Rs 5,40,000.
Your buyers matter too. A household building its own home can't claim credit, so it simply pays a lower bill at 6%. A contractor building for a client under a works contract can usually claim credit on your 12% invoice. A business building its own office or shed can't, because Section 17(5)(d) of the CGST Act blocks credit on construction on its own account. Our GST on construction materials guide covers the buyer side in more detail.
When does a brick kiln need GST registration?
Most suppliers of only goods can stay unregistered up to Rs 40 lakh under Notification 10/2019-Central Tax. Bricks are an exception. From 1 April 2022, Notification 03/2022-Central Tax added the four brick and tile entries to that notification's excluded list. So a kiln falls back to Section 22 of the CGST Act:
- Rs 20 lakh of aggregate turnover in a financial year in most States.
- Rs 10 lakh if you supply from one of the special category States covered by the first proviso: Manipur, Mizoram, Nagaland or Tripura.
A kiln selling 4 lakh bricks a season at Rs 6 each turns over Rs 24 lakh and crosses the limit. Our GST registration service handles the application.
Composition isn't an option for brick makers. Notification 04/2022-Central Tax added the same four entries to Notification 14/2019-Central Tax, which lists goods whose manufacturers can't opt for composition under Section 10(1). That bar applies from 1 April 2022. If you also trade in sand or cement, check our composition scheme guide before assuming anything for those lines.
E-way bills. A registered kiln moving a consignment worth more than Rs 50,000, including GST, must generate an e-way bill before the truck leaves (Rule 138(1), CGST Rules). States can notify areas exempt from this for movement within the State, so check our state-wise e-way bill guide.
Step-by-Step Guide
GST Setup for a Brick Kiln
Track turnover from the first sale of the season
Register within 30 days of crossing Rs 20 lakh (Rs 10 lakh in Manipur, Mizoram, Nagaland or Tripura). The Rs 40 lakh goods limit doesn't apply to bricks.
Work out your input GST
Add up GST on coal, machinery hire, repairs and other billed inputs. Compare it with 3% of expected sales.
Pick 12% with credit or 6% without
Above 3%, 12% with credit usually costs less. Below 3%, 6% usually costs less. On 6%, don't claim credit on brick inputs, and reverse credit on shared inputs.
Bill every sale and file returns
Issue a tax invoice with the right rate and HSN, generate e-way bills above Rs 50,000, and file GSTR-1 and GSTR-3B.
Source: Section 22 and 17(2), CGST Act; Notifications 10/2019-CT and 03/2022-CT; 14/2025-CT(R) and 02/2022-CT(R); Rule 138, CGST Rules
Our GST return filing service files GSTR-1 and GSTR-3B for kilns on either rate.
What income tax rules hit kilns on coal, labour and cash?
TCS on coal. A seller of coal or lignite collects TCS from the buyer. It was 1% under Section 206C(1) of the Income-tax Act 1961 up to 31 March 2026. From 1 April 2026 it's 2% under Section 394(1) of the Income-tax Act 2025 (Table, S. No. 5, as amended by the Finance Act 2026). But a resident buyer using the coal "for the purposes of manufacturing, processing or producing articles or things", and not for trading, can give the seller a written declaration in the prescribed form. No TCS is collected after that (Section 394(2); earlier Section 206C(1A)). A kiln burning coal to fire bricks should give this declaration at the start of each year's purchases. If TCS is collected anyway, claim it as credit in your return.
TDS on labour contractors. Many kilns pay a labour contractor who brings and manages the moulders. If you're a company, a firm, or an individual or HUF whose business turnover was above Rs 1 crore in the previous year, you must deduct TDS on those contract payments: 1% if the contractor is an individual or HUF, 2% otherwise. It applies once one payment is above Rs 30,000 or the year's total is above Rs 1,00,000. This was Section 194C up to 31 March 2026, and is now Section 393(1), Table S. No. 6(i), of the 2025 Act. Wages you pay workers directly are not contract payments. See our TDS on contractor payments guide and our TDS filing service.
Paying in cash. If you claim actual expenses, any payment above Rs 10,000 to one person in a day, other than by bank or a prescribed electronic mode, is disallowed (Section 36(4) of the 2025 Act; earlier Section 40A(3)). The Act allows prescribed exceptions based on banking facilities, so check them before relying on one. See our Section 40A(3) guide.
Taking cash from buyers. You can't receive Rs 2,00,000 or more in cash from one person in a day, for one transaction, or for one event (Section 186 of the 2025 Act; earlier Section 269ST). The penalty equals the amount received (Section 451; earlier 271DA). A builder's order of 40,000 bricks at Rs 6 is Rs 2,40,000 plus GST, so take it by bank or UPI. See our cash transaction limits guide.
How is a kiln's income taxed under Section 44AD?
A resident individual, HUF or partnership firm (not an LLP) can declare presumptive profit if turnover is up to Rs 2 crore, or up to Rs 3 crore where cash receipts are within 5% of total receipts. Deemed profit is 6% of receipts by bank or digital mode, and 8% of cash receipts. This was Section 44AD for FY 2025-26 and is Section 58 of the 2025 Act from tax year 2026-27, with the same limits and rates. Our Section 44AD guide explains the five-year lock if you later declare a lower profit.
Example (tax year 2026-27, new regime): a kiln proprietor turns over Rs 1.9 crore. Rs 1.2 crore comes by bank and UPI; Rs 70 lakh is in cash. Cash is about 37% of receipts, so the Rs 2 crore limit applies, and Rs 1.9 crore is within it.
- Deemed profit: 6% of Rs 1,20,00,000 (Rs 7,20,000) plus 8% of Rs 70,00,000 (Rs 5,60,000), so Rs 12,80,000.
- Tax: Rs 20,000 on Rs 4-8 lakh, Rs 40,000 on Rs 8-12 lakh, and 15% of Rs 80,000 (Rs 12,000). Total Rs 72,000.
- Income is above Rs 12 lakh, so there's no full Section 87A rebate (Section 156 of the 2025 Act). Marginal relief doesn't help either, because the tax (Rs 72,000) is less than the income above Rs 12 lakh (Rs 80,000).
- Add 4% cess of Rs 2,880. Tax payable: Rs 74,880.
If the same Rs 1.9 crore all came by bank or UPI, deemed profit would be 6%, or Rs 11,40,000. Tax would be Rs 20,000 plus 10% of Rs 3,40,000 (Rs 34,000), so Rs 54,000. The rebate covers up to Rs 60,000 for income up to Rs 12 lakh, so tax payable would be nil. Moving buyers to bank payments saves this kiln Rs 74,880.
If turnover is above Rs 2 crore and cash receipts are above 5%, Section 44AD isn't available. You keep books, and a tax audit applies once turnover is above Rs 1 crore (Section 63 of the 2025 Act; earlier Section 44AB). The return is due by 31 August 2027 for tax year 2026-27 if no audit applies, and 31 October 2027 if it does (Section 263(1)(c), as substituted by the Finance Act 2026).
Common mistakes brick kiln owners make
- Staying unregistered up to Rs 40 lakh. The higher goods limit doesn't apply to bricks. Your limit is Rs 20 lakh.
- Applying for composition. Brick manufacturers have been barred since 1 April 2022. Choose between 12% with credit and 6% without.
- Charging 6% and still claiming credit on coal. The 6% rate depends on not taking that credit. Credit claimed on brick inputs puts the whole concessional rate at risk.
- Charging 6% on refractory bricks. They're under heading 6902 at 18% and aren't in the 6% notification.
- Letting the coal supplier collect 2% TCS. If the coal is for firing bricks, give the manufacturing declaration under Section 394(2) before purchases begin.
- Taking Rs 2 lakh or more in cash for one order. Section 186 (earlier 269ST) applies per transaction, and the penalty equals the cash received.
How Tax Garden helps brick kiln owners
We compare your input GST with your sales to show whether 12% or 6% costs your kiln less, register you for GST, and file your GSTR-1 and GSTR-3B through our GST return filing service. We also work out Section 44AD against your real margin and prepare your return through our ITR filing service.
