GST on Building Materials: Cement, Steel and Tiles

Building materials are where most people meet GST in large amounts: a house, a shop extension or a factory shed can carry lakhs of rupees of tax on cement, steel, tiles and paint before a single labour bill arrives. This guide sets out the current GST on building materials after the GST 2.0 rate reform of 22 September 2025 — including the headline change, GST on cement falling from 28% to 18% — and then explains how that tax flows into what a builder or contractor charges you, and when it can be claimed back as input tax credit.

GST rates on building materials at a glance

Under GST 2.0, most goods now sit in a 5% or 18% slab, with a 0% exempt band and a 40% rate for a short list of luxury and sin goods. The structure is explained in our guide to the current GST rate slabs. For construction, the practical effect is that almost everything on a site is either 5% or 18%:

The HSN column is a pointer, not a substitute for classification. The tariff sorts goods by what they are made of and how far they have been worked, which is why cement, a concrete block and a clay brick sit in three different chapters. Our guides to the HSN code for cement, steel and iron and hardware items walk through those boundaries.

GST on cement: 28% down to 18%

Cement spent the first eight years of GST in the 28% slab, one of very few mass-market materials taxed at the top rate. GST 2.0 moved it to 18% from 22 September 2025, in line with the broader shift of most former 28% goods down to 18%. The GST rate on cement is now the same as on steel and tiles.

On a 50 kg bag priced at ₹400 before tax, the change works out like this:

• At 28%: ₹400 + ₹112 GST = ₹512.
• At 18%: ₹400 + ₹72 GST = ₹472.

That is ₹40 a bag. For a house that consumes 1,500 bags, the tax saving at the same base price is about ₹60,000 — real money for an individual who cannot claim any of it back. Whether the full cut reached the counter depends on how dealers repriced, so compare the pre-tax price on the bill, not just the total.

Note that the 18% applies to cement itself. Ready-mix concrete, concrete blocks and precast items are separate products with their own entries, even though cement is their main ingredient.

GST on steel, TMT bars and iron

The GST rate on steel did not change in the reform. TMT bars, plain rods, wire, angles, channels, beams, sheets, GI and MS pipes and fabricated structural sections are all at 18%. The same applies to the common searches for the GST rate on iron: iron and non-alloy steel products sold for construction are 18%.

Classification still matters for reporting even when the rate is the same. TMT bar is usually heading 7214 (or 7215 for some cold-worked bars), sections are 7216, and once steel is cut, drilled and welded into a frame it becomes an article under 7308. Where a supplier fabricates and erects the structure on your site under one contract, the supply is usually a works contract service, not a sale of steel — see the works contract HSN and SAC guide.

GST on tiles, bricks and stone

Tiles

The GST rate on tiles is 18% for ceramic, glazed and vitrified floor and wall tiles. Concrete paver blocks and cement tiles are articles of cement and are also generally at 18%.

Bricks

GST on bricks is the one line on a site where a single number would mislead. Clay bricks made in kilns are covered by a special composition-style arrangement: a brick kiln can pay a lower rate without claiming input tax credit, or opt for a higher rate with credit, subject to conditions in the notification. Fly ash bricks, sand-lime bricks and AAC or cement blocks have their own entries. Several of these were in the old 12% band, most of which moved to 5% under GST 2.0. Because the kiln scheme rates and the treatment of specific brick types were adjusted in the reform, check the current rate notification for the exact type of brick before you bill or budget; we have not reproduced the post-reform kiln rates here.

Sand, aggregate, marble and granite

Natural sand and crushed stone aggregate are in the 5% slab. Marble and granite follow the raw-versus-worked split: crude or roughly trimmed blocks fall in Chapter 25 and were in a lower slab before the reform, with many such lines moving down further in 2025, while cut and polished slabs and tiles are worked stone in Chapter 68 at 18%. If you are buying blocks in bulk from a quarry, confirm the exact entry with the supplier.

GST on paint, plywood and finishing materials

The GST rate on paint is 18%, covering emulsions, enamels, distempers, varnishes, primers and wall putty. GST on plywood is also 18%, as it is for blockboard, veneered panels and laminates. Most of the finishing stage — sanitary ware, pipes and fittings, electrical wire and switches, door hardware — sits at 18% too, though each item carries its own HSN line and a few were moved by the reform. Our HSN code list with GST rates explains how to read the current notification for any one of them.

How material GST feeds into construction prices

Who bears the GST on materials depends on who buys them and what they then sell.

• An individual building their own house pays GST on every bag and bar and cannot claim any of it back. The material GST is a straight cost.
• A builder selling under-construction flats charges the buyer an effective 5% (or 1% for affordable housing) with no input tax credit. The GST the builder pays on cement, steel and tiles is therefore folded into the flat price. Lower GST on cement lowers the builder's cost but does not change the 1% or 5% on your demand letter — see GST on under-construction property.
• A contractor executing a works contract — a composite supply of materials and labour for building, renovation or fit-out — charges GST on the whole contract value at the works contract rate and generally claims credit on the materials. The material GST is recovered from the output tax rather than added on top.

This is why a contractor's quote and a builder's quote are not directly comparable: one carries credit, the other has the material tax baked in.

Input tax credit on building materials

A trader reselling cement, steel or tiles claims full credit, like any other trader. The difficulty arises when the materials go into a building. Section 17(5) of the CGST Act blocks input tax credit on goods and services used for the construction of immovable property on your own account, even when the building is used for business, and on works contract services received for such construction. The exception is plant and machinery, which does not include land, buildings or other civil structures.

In practice: a company building its own office, warehouse or showroom pays 18% on cement and steel and cannot set it off. A contractor building that same warehouse for a client can claim credit on the materials, because the materials go into an onward taxable works contract. Our guide to blocked credits under Section 17(5) covers the clauses, the plant and machinery carve-out and the litigation around it.

Practical points for buyers and contractors

• Check the rate on the bill. A cement invoice dated after 22 September 2025 should show 18%, not 28%. An invoice charging the old rate is either a stale billing system or an overcharge.
• Check the dealer's GSTIN. Large purchases of steel and cement are a known area for fake invoicing. Confirm the GSTIN on the bill is genuine and active before you pay, especially if you intend to claim credit; see is the GST on my bill real? A business buying in volume can verify supplier GSTINs automatically through our GSTIN verification API.
• Separate supply from works contract. If a vendor supplies and installs, read the contract. A works contract is a service with its own rate, not a bundle of separately taxed goods.
• Budget blocked credit as cost. For own-account construction, plan on the GST being part of the project cost from the start.

Frequently asked questions