Building Your Own Home? Find Out About GST On Construction Materials

If you are planning to build your own home in India, you might be wondering how much GST (Goods and Services Tax) you will have to pay on the construction materials. For the unaware, GST is an all-encompassing indirect tax. If you are dealing with a supply of goods and services in India, then GST will be charged to them. It has replaced many previous taxes such as excise duty, service tax, VAT, etc.

Remember, the GST rate on construction materials remains an ever-changing number. Therefore, you should always check the current GST rates before heading into a material purchase for home construction. In addition to the GST on construction materials, you may also have to pay other taxes, such as stamp duty and registration fees. The amount of these taxes will vary depending on the state in which you are building your home. So, one should only head into home construction once they are fully aware of all costs.

GST on Construction Materials: Quick Glance

GST rates on construction materials vary depending on the type and category of the material. For example, cement is taxed at 28%, while sand and gravel are taxed at 5%. Some materials, such as bricks, tiles, marble, granite, etc, are taxed at different rates depending on whether they are handmade or machine-made.

Here is a list of some common construction materials and their GST rates as of May 2023:

• Cement: 28% (18% for mortar, concrete, and refractory cement; 12% for cement bonded particle board)
• Iron and steel: 18%
• Sand: 18%; 5% for natural sand
• Gravel: 5%
• Bricks: 5% to 28%
• Tiles: 5% to 28%
• Marble: 12% for blocks; 28% for other
• Granite: 12% for blocks; 28% for polished
• Paint: 28%
• Electrical fittings: 18%
• Plumbing fittings: 28%; 18% for pipe fittings
• Building stones: 5%

You can check the latest GST rates on the official website of the Central Board of Indirect Taxes and Customs (CBIC)

GST is applicable to the value of the supply of goods and services. This means that you will have to pay GST on the total amount you pay to the supplier of the construction materials. For example, if you buy cement worth Rs. 10,000 from a supplier, you will have to pay Rs. 2,800 as GST (28% of Rs. 10,000).

However, you can also claim an input tax credit (ITC) on the GST that you pay on the construction materials. ITC is a mechanism that allows you to reduce your GST liability by the amount of GST that you have already paid on your inputs. For example, if you use the cement you bought for Rs. 10,000 to construct your home, you can claim Rs. 2,800 as ITC and reduce your GST liability accordingly.

To claim ITC, you must have a valid GST invoice from the supplier of the construction materials. You must also file your GST returns online and report your purchases and sales of goods and services. 

Tips to Save Money on GST on Construction Materials

Here are some tips for saving money on GST when building your own home in India:

1. Buy construction materials in bulk

This can help you to save on the GST as you will only have to pay one rate of GST on the entire purchase.

2. Look for discounts and offers

Many retailers offer discounts and offers on construction materials. You can save money by taking advantage of these offers.

3. Shop around for the best prices

The GST rate on construction materials is the same across India, but the prices of construction materials can vary from retailer to retailer. You can save money by shopping around for the best prices.

4. Use a construction contractor

A construction contractor can help you to save money on GST by taking care of all the paperwork and ensuring that you are paying the correct rates of GST.

Final Words

Building your own home can be a rewarding experience, but it also involves a lot of planning and budgeting. By knowing the GST rates on construction materials, you can estimate your tax liability and claim ITC to reduce your tax burden.