In 2025, Rahul, a young contractor in Lucknow, started construction on a duplex. He took notice of the following important GST rates when he was planning the cost of the materials: 28% for cement, 18% for steel and iron, 5% for sand, and 12% for prefabricated items. Brick types ranged from fly ash blocks at 12% to clay bricks at 5%.

Rahul decreased his effective tax burden by about ₹1.5 lakh by keeping meticulous records of his invoices and claiming Input Tax Credit (ITC). His focus on GST compliance, informed by data from gst.gov.in, maintained the project's profitability and efficiency.

GST on Building Materials – Create a Table Mentioning Different Categories of Building Materials with Price and Applicable GST Rate

Material	GST Rate (%)	HSN Code	Notes
Cement	28%	2523	All types of cement, including Portland, Slag, Super Sulphate, and Aluminous
Steel & Iron Products	18%	7213	Includes TMT bars, rods, wire, angles, etc.
Bricks	5% – 28%	6901	Varies by type; e.g., fly ash bricks at 5%, certain types at 12% or 28%
Sand	5%	2515	Natural sand; bituminous or oil shale attracts 18%
Crushed Stones, Pebbles, Gravel	5%	2517	Includes materials like crushed stone and gravel
Marble & Granite	12% – 28%	2515	Blocks at 12%, not in blocks at 28%
Tiles	5% – 28%	6907	Varies by type; e.g., earthen tiles at 5%, ceramic tiles at 28%
Paints & Varnishes	28%	3208	Includes wall paints, varnishes, and enamels
Pipes & Fittings	18%	3917	Includes PVC, CPVC pipes and fittings
Sanitary Ware	18% – 28%	6910	Includes wash basins, WC pans, sinks
Wallpaper & Wall Coverings	28%	4814	Includes wallpapers and wall panels
Electrical Appliances	28%	8536	Includes lighting fixtures and related products

Types of Building Materials and Their GST Applicability

Type of Building Material	GST Rate (%)	Examples
Cement-Based Materials	28%	Cement (Portland, slag, etc.)
Bricks and Blocks	5% – 28%	Fly ash bricks (5%), AAC blocks (12%), glazed bricks (28%)
Stone-Based Materials	5% – 28%	Sandstone (5%), Marble (12%), Granite slabs (28%)
Steel and Metal Products	18%	TMT bars, steel rods, structural steel
Wood and Wood-Based Products	12% – 18%	Plywood, MDF, particle board
Tiles and Ceramics	5% – 28%	Vitrified tiles (28%), roofing tiles (5%)
Glass and Glazing Materials	18%	Float glass, toughened glass
Electrical Materials	18% – 28%	Wires, switches (18%), lighting fixtures (28%)
Plumbing and Fittings	18%	PVC/CPVC pipes, bathroom fittings
Sanitary Ware	18% – 28%	Washbasins, toilet seats
Paints and Finishes	28%	Wall paint, enamel, varnish
Concrete Products	18%	Ready-mix concrete, concrete blocks
Roofing Materials	5% – 28%	Earthen tiles (5%), asbestos sheets (18%)

Clarification:

Types refer to categories (e.g., “Cement-Based,” “Tiles and Ceramics”) rather than individual materials.
GST rates are based on GST Council updates and HSN classification as of 2025. Rates may vary by specific material type and usage.

Impact of GST on the Building Materials Industry with Examples

Under the previous tax regime, many building materials were subject to lower taxes. For instance, cement was taxed at an effective rate of 31%, while fly ash bricks attracted a 5% VAT. Post-GST, cement is taxed at 28%, and fly ash bricks at 12%, leading to increased input costs for construction projects.

Read More – GST on Sand

Example: In Gujarat, unseasonal rains in May 2025 caused significant damage to brick manufacturing units, leading to losses of approximately ₹450 crore. The Gujarat Bricks Manufacturers' Federation has requested a reduction in GST on bricks from 12% to 5% to alleviate the financial strain on the industry.

Impact on Affordable Housing

The GST regime has introduced specific provisions for affordable housing projects. Under the Pradhan Mantri Awas Yojana (PMAY), affordable housing projects are subject to a reduced GST rate of 1% without the benefit of ITC. This initiative aims to promote housing for the economically weaker sections of society.

GST Impact on Building Materials:

Material	Pre-GST Tax Rate	Post-GST Tax Rate	Impact
Cement	31%	28%	A slight reduction in cost
Fly Ash Bricks	5%	12%	Increased cost
Steel (TMT Bars)	18%	18%	Neutral
Tiles	26%	28%	Increased cost
Paint	28%	28%	Neutral
Electrical Goods	12%	28%	Increased cost

Input Tax Credit (ITC) on Building Materials

GST allows for the seamless flow of Input Tax Credit (ITC), enabling builders to offset taxes paid on inputs against taxes collected on outputs. This mechanism reduces the overall tax burden and enhances cash flow for construction companies.

Example: Developers in the organised sector have reported marginal reductions in pricing due to the elimination of cascading taxes and the availability of ITC. For instance, the uPVC category is taxed at 18%, and aluminium at 28%, but the overall product pricing has become more competitive compared to the previous regime.

Challenges with Reverse Charge Mechanism (RCM):

The Reverse Charge Mechanism (RCM) under GST requires registered builders to pay tax on certain supplies received from unregistered suppliers. This provision can increase costs and complicate compliance, particularly for small developers.

Also Read - GST on Steel

Example: Developers must pay GST on services received from unregistered goods transporters, legal services, and services from government or local authorities. These taxes must be paid in cash, as they cannot be offset with ITC, potentially straining the finances of smaller construction firms.

Conclusion

GST has made the tax system simpler and clearer in the building materials sector. However, it has also caused some problems, such as higher input costs for certain materials and confusing rules under the Reverse Charge Mechanism. The overall impact varies by industry. Larger, organised companies usually benefit because they can claim Input Tax Credit (ITC). In contrast, smaller developers often face cash flow difficulties and complex compliance requirements.

FAQs Related to GST on Building Materials

Q. What is the GST rate on cement?

Cement is taxed at 28% GST, one of the highest rates among building materials.

Q. Are bricks taxed under GST?

Yes, bricks attract 5% to 12% GST depending on their type (e.g., fly ash bricks at 5%).

Q. Can builders claim input tax credit (ITC) on building materials?

Yes, but only for commercial construction; ITC is not allowed for residential construction sold before completion.

Q. Is sand taxable under GST?

Yes, natural sand attracts 5% GST.