Every purchase order on an Indian construction site now carries a GST line. Cement, steel, sand, bricks, tiles, paint, wiring, plumbing, waterproofing chemicals — each material sits in a specific tax slab and carries a specific HSN code that must appear on the invoice.
Get it wrong and you lose input tax credit. Get it right and you have a cleaner audit trail, faster GST returns, and a more accurate project budget.
This guide is a single-page reference for every major construction material's GST rate, HSN code, and ITC eligibility as of April 2026, incorporating the important changes that came into effect on 22 September 2025 when the GST Council rationalised rates across building materials.
What changed in September 2025
The 54th GST Council meeting in September 2025 introduced the most significant rate changes for construction since GST launched in 2017. The headline change was cement: the rate dropped from 28 percent to 18 percent, directly reducing the cost of one of the largest material heads on any RCC project.
But the changes went further. The Council rationalised several material categories to reduce the number of slabs and simplify compliance. Here is what matters most for site teams:
- Cement moved from 28 percent to 18 percent (HSN 2523)
- Raw timber moved from 5 percent to 18 percent (HSN 4403)
- Building bricks (non-refractory clay and fly ash bricks) were clarified at 5 percent for small manufacturers opting out of ITC, and 12 percent with ITC
- Ready-mix concrete stayed at 18 percent (HSN 3824)
- Steel, tiles, paint, electrical, and plumbing remained at 18 percent
The net effect for a typical residential project is a reduction in the overall GST burden of roughly 1.5 to 3 percent of the total material cost, depending on the share of cement in the bill of materials.
Complete GST rate table for construction materials
The table below covers every major material category used on Indian construction sites. Rates are current as of April 2026.
Structural materials
| Material | HSN Code | GST Rate | Notes | |----------|----------|----------|-------| | Portland cement (OPC, PPC, PSC) | 2523 | 18% | Reduced from 28% in Sep 2025 | | Ready-mix concrete (RMC) | 3824 5010 | 18% | Includes transit mixer delivery | | TMT steel bars and rods | 7213 / 7214 | 18% | All diameters, Fe 500 and Fe 550 | | Structural steel sections (I-beams, channels, angles) | 7216 | 18% | Hot-rolled and cold-formed | | Steel wire and binding wire | 7217 | 18% | Including GI wire | | Natural sand (river sand, pit sand) | 2505 | 5% | Lowest slab among structural materials | | Manufactured sand (M-sand) | 2505 | 5% | Same classification as natural sand | | Stone aggregate and crushed stone | 2517 | 5% | 20 mm, 40 mm, and other sizes | | Building bricks (clay, fly ash) | 6815 | 5% | Without ITC; small manufacturers | | Building bricks (clay, fly ash) with ITC | 6901 | 12% | With full ITC; larger manufacturers | | Cement bricks and blocks | 6810 | 12% | Solid and hollow blocks | | AAC blocks (autoclaved aerated concrete) | 6810 | 12% | Lightweight blocks | | Refractory bricks | 6902 | 18% | Kiln and furnace use |
Finishing materials
| Material | HSN Code | GST Rate | Notes | |----------|----------|----------|-------| | Ceramic tiles (floor and wall) | 6907 / 6908 | 18% | Vitrified and non-vitrified | | Marble slabs (rough/blocks) | 2515 | 12% | Unpolished, raw blocks | | Marble and granite (polished, finished) | 6802 | 18% | Cut and polished slabs | | Natural stone (kota, sandstone) | 6801 / 6802 | 5–18% | 5% for rough; 18% for polished | | Plywood and veneered panels | 4412 | 18% | All grades, marine and commercial | | Particle board and MDF | 4411 | 18% | Including pre-laminated | | Raw timber and logs | 4403 | 18% | Increased from 5% in Sep 2025 | | Sawn timber (planks, beams) | 4407 | 18% | Including seasoned timber | | Paint and varnish | 3208 / 3209 | 18% | Interior, exterior, primers | | Putty, fillers, and wall care products | 3214 | 18% | Includes white cement putty | | Glass (float glass, window glass) | 7005 | 18% | Including toughened and laminated | | Aluminium sections and profiles | 7604 | 18% | For windows, doors, partitions |
Plumbing and sanitary
| Material | HSN Code | GST Rate | Notes | |----------|----------|----------|-------| | PVC pipes and fittings | 3917 | 18% | SWR, pressure, and conduit pipes | | CPVC and UPVC pipes | 3917 | 18% | Hot and cold water supply | | GI pipes and fittings | 7306 | 18% | Galvanised iron, threaded | | Copper pipes and fittings | 7411 | 18% | Including copper tubes | | Sanitary ware (WC, basin, urinal) | 6910 | 18% | Ceramic and vitreous china | | Water tanks (plastic) | 3925 | 18% | Overhead and underground | | Water pumps | 8413 | 18% | Submersible and centrifugal | | Taps, cocks, valves | 8481 | 18% | All types including ball valves |
Electrical
| Material | HSN Code | GST Rate | Notes | |----------|----------|----------|-------| | Electrical wires and cables | 8544 | 18% | Copper and aluminium conductors | | Switches and sockets | 8536 | 18% | Modular and conventional | | MCBs, RCCBs, distribution boards | 8536 | 18% | Switchgear and protection | | Conduit pipes (PVC) | 3917 | 18% | Rigid and flexible | | LED lights and fittings | 9405 | 18% | Including tube lights and panels | | Ceiling fans | 8414 | 18% | Residential and industrial |
Waterproofing and chemicals
| Material | HSN Code | GST Rate | Notes | |----------|----------|----------|-------| | Waterproofing compounds and coatings | 3214 / 3824 | 18% | Cementitious and chemical | | Bitumen and asphalt | 2713 / 2715 | 18% | Roofing and road work | | Epoxy coatings and sealants | 3214 | 18% | Floor coatings and joint sealants | | Admixtures (plasticisers, retarders) | 3824 | 18% | Concrete admixtures | | Construction chemicals (bonding agents) | 3506 / 3824 | 18% | Including tile adhesives |
Understanding input tax credit for construction
Input tax credit is where most confusion sits for builders and contractors. The rules are different depending on whether you are a contractor executing a works contract, a developer building for sale, or an owner constructing on your own account.
When ITC is available
If you are a contractor supplying works contract services, you can claim ITC on all materials and sub-contractor invoices used to deliver that contract. This is the most common scenario for construction companies:
- You buy cement, steel, sand, tiles, and other materials
- You buy works contract services from sub-contractors (masonry, plumbing, electrical)
- You charge GST on your output supply (the works contract invoice to the developer or client)
- You claim ITC on all inputs against your output liability
This follows the normal ITC chain. The key condition is that your business must be supplying works contract services as output. A contractor billing 18 percent GST on a commercial project or 12 percent on a residential project can claim full ITC on inputs.
When ITC is blocked
Section 17(5)(c) and Section 17(5)(d) of the CGST Act block ITC in two specific scenarios:
Section 17(5)(c): ITC is not available on works contract services received for construction of immovable property on own account, unless the works contract is an input service for further supply of works contract service.
Section 17(5)(d): ITC is not available on goods or services received for construction of immovable property on own account, even if used in the course or furtherance of business.
In plain language:
- A developer building apartments for sale under the 1 percent (affordable housing) or 5 percent (regular residential) GST scheme cannot claim ITC on materials or sub-contractor invoices
- A company constructing its own office or factory cannot claim ITC on construction materials
- A contractor building for a client and charging GST on the works contract can claim ITC
The practical impact
For developers using the concessional 1 percent or 5 percent scheme, the inability to claim ITC means the effective material cost is higher. The GST paid on cement (18 percent), steel (18 percent), and other inputs becomes a cost line item, not a recoverable credit.
This is why many developers factor in the "ITC loss" when comparing the concessional scheme against the 12 percent or 18 percent scheme with full ITC. The break-even depends on the land cost share: projects with a high land cost component (which is outside GST) often benefit from the concessional scheme despite losing ITC.
For contractors, the ITC chain works normally. The key discipline is ensuring every supplier invoice carries the correct HSN code and GSTIN, and that the invoice appears in GSTR-2B before you claim the credit.
GST on works contract services
Works contract services (construction, renovation, repair) have their own rate structure that sits alongside material rates:
| Service type | SAC Code | GST Rate | ITC | |-------------|----------|----------|-----| | Commercial construction (works contract) | 9954 | 18% | Full ITC available | | Residential construction (works contract) | 9954 | 12% | Full ITC available | | Affordable housing (carpet area ≤60 sqm in metros, ≤90 sqm in non-metros; value ≤₹45 lakh) | 9954 | 1% | No ITC | | Regular residential (developer selling to buyer) | 9954 | 5% | No ITC | | Government works (railways, metro, roads, bridges) | 9954 | 12% | Full ITC available | | Composite supply of works contract to government | 9954 | 12% | Full ITC available | | Sub-contractor to main contractor | 9954 | 18% | ITC available to main contractor |
The sub-contractor scenario is worth noting. If you are a main contractor and you hire a sub-contractor for masonry, tiling, or electrical work, the sub-contractor charges 18 percent GST on their invoice. You can claim ITC on this invoice against your output supply. The effective cost to you is only the base amount, not the GST-inclusive amount.
How GST affects your project budget
Let us work through a simplified example for a 2,000 sq ft residential building in a Tier-2 city to see the actual GST impact.
Material cost breakdown with GST
| Material | Quantity | Rate (excl. GST) | GST Rate | GST Amount | Total | |----------|----------|-------------------|----------|------------|-------| | Cement (OPC 53 grade) | 450 bags | ₹370/bag | 18% | ₹29,970 | ₹1,96,470 | | TMT steel (Fe 500D) | 4.5 MT | ₹58,000/MT | 18% | ₹46,980 | ₹3,07,980 | | River sand | 30 brass | ₹3,000/brass | 5% | ₹4,500 | ₹94,500 | | Stone aggregate (20 mm) | 25 brass | ₹2,200/brass | 5% | ₹2,750 | ₹57,750 | | Bricks (clay) | 25,000 nos | ₹7/brick | 5% | ₹8,750 | ₹1,83,750 | | Ceramic tiles | 2,000 sqft | ₹45/sqft | 18% | ₹16,200 | ₹1,06,200 | | Paint | 40 litres | ₹350/litre | 18% | ₹2,520 | ₹16,520 | | Plumbing (pipes, fittings) | Lump sum | ₹85,000 | 18% | ₹15,300 | ₹1,00,300 | | Electrical (wires, switches) | Lump sum | ₹75,000 | 18% | ₹13,500 | ₹88,500 | | Sanitary ware | Lump sum | ₹60,000 | 18% | ₹10,800 | ₹70,800 | | Total | | ₹9,45,000 | | ₹1,51,270 | ₹10,96,270 |
In this example, the total GST on materials comes to approximately ₹1.51 lakh on a material cost of ₹9.45 lakh. That is about 16 percent of the material cost, or roughly ₹76 per sq ft of built-up area.
Before and after the September 2025 changes
If cement were still at 28 percent GST (the old rate), the GST on cement alone would have been ₹46,620 instead of ₹29,970 — a saving of ₹16,650 on just the cement line item. For larger projects using 2,000 to 5,000 bags of cement, this saving scales to ₹75,000 to ₹1.85 lakh.
HSN code compliance for site teams
Every tax invoice for material purchases must carry the correct HSN code. The number of digits required depends on turnover:
| Annual turnover | HSN digits required | |----------------|-------------------| | Up to ₹5 crore | 4 digits | | ₹5 crore to ₹10 crore | 6 digits | | Above ₹10 crore | 8 digits |
For construction contractors, the SAC (Services Accounting Code) 9954 applies to works contract services.
Common HSN mistakes on construction invoices
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Using 6810 for all cement products. HSN 6810 covers articles of cement (blocks, pipes, pavers), not cement itself. Cement bags are 2523. If your supplier uses the wrong code, your ITC claim can be questioned during audit.
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Mixing up brick codes. Clay bricks (6901), cement blocks (6810), and refractory bricks (6902) carry different rates. A mismatch between the HSN on the invoice and the actual material supplied creates a reconciliation problem in GSTR-2B.
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Not distinguishing raw stone from polished stone. Rough marble blocks at 12 percent (HSN 2515) versus polished marble slabs at 18 percent (HSN 6802) is a common source of confusion, especially for finishing contractors.
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Timber classification after September 2025. Raw timber moved from 5 percent to 18 percent. Some suppliers may still be using the old rate. Verify that your timber and plywood invoices reflect the current 18 percent rate.
Practical GST compliance tips for contractors
1. Match every purchase to GSTR-2B before claiming ITC
The ITC you claim in GSTR-3B must appear in your GSTR-2B (auto-populated from suppliers' GSTR-1 filings). If a supplier files late or enters the wrong HSN code, the credit will not appear. Check GSTR-2B before filing.
2. Keep material-wise GST registers
Maintain a register or digital tracker that records, for each material purchase: supplier GSTIN, invoice number, invoice date, HSN code, taxable value, GST rate, CGST, SGST (or IGST for inter-state), and the project or cost centre the material was used on.
This is especially important when you are running multiple projects in different states, because inter-state purchases attract IGST (which is claimed differently from CGST plus SGST) and the project-wise allocation determines which state's GST return the credit appears in.
If you are already using construction inventory management software, the GST details can be captured at the point of GRN entry. This eliminates the manual register and gives you a project-wise GST report at the click of a button.
3. Verify supplier GST registration status periodically
Before placing large orders, verify that the supplier's GSTIN is active on the GST portal. If a supplier's registration is suspended or cancelled, any ITC claimed on their invoices will be reversed.
4. Separate material and labour in composite invoices
When a sub-contractor supplies both material and labour (common in tiling, plumbing, electrical work), the invoice should ideally split the material component and the service component. This helps during ITC reconciliation and in case of any rate disputes.
5. Issue proper debit and credit notes
If materials are returned (wrong specification, damaged goods, excess delivery), ensure the supplier issues a credit note with the correct HSN code and GST adjustment. Without a proper credit note, the original ITC remains on your books and creates a mismatch.
How material tracking software helps with GST compliance
Manual GST tracking across a construction project with hundreds of material line items, dozens of suppliers, and multiple months of procurement is error-prone. This is where digital tools make a measurable difference.
A material indent and purchase order system that captures the HSN code at the indent stage ensures that every downstream document — the PO, the GRN, the payment voucher — carries the correct code. When the finance team files the GST return, the data is already structured.
Similarly, procurement software that tracks supplier-wise, material-wise, and project-wise GST automatically generates the input needed for GSTR-3B filing. No more manual spreadsheets, no more end-of-quarter panic.
If your material and billing workflows are still running on Excel instead of dedicated construction software, the GST compliance burden alone may justify the switch. Every mismatched HSN code, every missed GSTR-2B entry, every delayed credit note is a cash flow leak.
State-wise GST considerations
GST is a destination-based tax. For construction contractors operating across state lines, these points matter:
- Inter-state material purchases attract IGST (equal to CGST plus SGST combined). IGST credit can be used against CGST, SGST, or IGST output liability.
- Intra-state material purchases attract CGST plus SGST. CGST credit can only be used against CGST or IGST. SGST credit can only be used against SGST or IGST.
- Place of supply for works contract is the location of the immovable property. If you are a Delhi-based contractor working on a project in Jaipur, the works contract GST is Rajasthan SGST plus CGST, not Delhi.
- E-way bills are required for movement of goods exceeding ₹50,000 in value. Construction materials moving from a supplier's godown to the project site need an e-way bill if the invoice value crosses this threshold.
Reverse charge mechanism for construction
Certain supplies attract GST under the reverse charge mechanism (RCM), where the recipient (buyer) pays the GST instead of the supplier:
- Sand, stone, and aggregate purchased from unregistered dealers — if your sand or aggregate supplier is not GST registered, you must pay GST under RCM at the applicable rate
- Goods transport agency (GTA) services — material transport by truck attracts 5 percent GST under RCM (or 12 percent under forward charge with ITC)
- Rent-a-cab services for worker transport may attract RCM
The RCM amount is self-assessed and paid in your GSTR-3B. You can claim ITC on the RCM amount paid, subject to the normal ITC eligibility rules.
For site teams buying sand and aggregate from local quarries or unregistered suppliers, RCM compliance is particularly important. Many small quarry operators are not GST registered, and the contractor becomes responsible for paying the tax.
Impact of the cement rate cut on Indian construction
The reduction of cement GST from 28 percent to 18 percent is worth examining in more detail because cement is used in virtually every construction activity.
Savings by project size
| Project type | Cement consumption | Annual saving from rate cut | |-------------|-------------------|---------------------------| | Individual house (2,000 sqft) | 400–500 bags | ₹15,000–₹18,500 | | Small apartment block (20 units) | 8,000–12,000 bags | ₹3–₹4.5 lakh | | Mid-size commercial (50,000 sqft) | 15,000–20,000 bags | ₹5.5–₹7.5 lakh | | Large township (500 units) | 80,000–120,000 bags | ₹30–₹45 lakh |
These savings flow directly to the project budget if the contractor passes on the lower GST to the developer or end customer. In practice, cement manufacturers adjusted MRP to reflect the lower tax, so the saving is visible on every purchase invoice.
For contractors who track material costs and wastage carefully, the cement rate cut combined with rate analysis discipline can meaningfully improve project margins.
FAQs
What is the GST rate on cement in 2026?
Cement attracts 18 percent GST under HSN code 2523 as of 2026. This rate came into effect on 22 September 2025, reduced from the earlier 28 percent.
Is GST on sand 5 percent or 18 percent?
Natural sand and manufactured sand (M-sand) attract 5 percent GST under HSN code 2505. This is one of the lowest GST rates among construction materials.
Can a builder claim input tax credit on construction materials?
It depends. A contractor supplying works contract services can claim full ITC on materials. A developer selling residential units under the 1 percent or 5 percent concessional GST scheme cannot claim ITC. A company constructing property on its own account also cannot claim ITC under Section 17(5)(d).
What is the GST rate on TMT steel bars?
TMT steel bars and rods attract 18 percent GST under HSN code 7213 or 7214. This rate applies to all diameters and all grades including Fe 500 and Fe 550D.
What HSN code should appear on a cement invoice?
Portland cement (OPC, PPC, PSC) uses HSN code 2523. Articles made of cement (blocks, pipes, pavers) use HSN code 6810. Using the wrong code can affect ITC claims during audit.
Is there GST on government construction projects?
Yes. Works contract services for government projects (roads, bridges, railways, metro) attract 12 percent GST with full ITC available to the contractor. There is no GST exemption for government construction work.
How does reverse charge apply to construction material purchases?
If you purchase sand, aggregate, or other materials from an unregistered supplier, you must pay GST under the reverse charge mechanism (RCM) and report it in your GSTR-3B. You can claim ITC on the RCM amount paid.
What is the GST rate on ready-mix concrete?
Ready-mix concrete (RMC) attracts 18 percent GST under HSN code 3824 5010. This includes delivery by transit mixer.
Has the GST rate on tiles changed in 2026?
No. Ceramic and vitrified tiles continue to attract 18 percent GST under HSN code 6907/6908. There has been no rate change since the September 2025 rationalisation.
What is the GST rate on plywood and timber in 2026?
Both raw timber (HSN 4403) and plywood (HSN 4412) attract 18 percent GST. Raw timber was increased from 5 percent to 18 percent in September 2025.
References and Further Reading
Primary and supporting sources cited in this article.
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