When you build a home, taxes are a major part of your total cost. The Goods and Services Tax (GST) has simplified India’s tax system, but for homeowners, contractors, and builders, understanding how GST applies to materials and services is essential for accurate budgeting.
At SP Constromate, we guide clients through every stage of building their dream homes — from architectural design and construction to interior finishing and tax management. This updated 2025 guide explains how the new GST 2.0 rates affect construction work with material.
Why GST Matters in Construction
GST applies to nearly everything involved in construction — raw materials, contractor services, and even finishing work. Knowing these rates helps homeowners:
- Estimate total project cost correctly.
- Choose cost-effective materials.
- Avoid unexpected expenses at the final stage.
For complete cost planning, you can also explore our construction packages that include material and service estimates.
Updated GST Rates on Construction Materials (2025)
As per the September 2025 GST 2.0 update, the government has simplified the tax structure, bringing most construction materials under 5% or 18% slabs.
| Material | GST Rate (2025) | Notes |
|---|---|---|
| Cement (all types) | 18% | Reduced from earlier 28%; major relief for builders. |
| Clay bricks | 5% | Eco-friendly and low-cost option. |
| Fly ash bricks | 12% | Moderate rate for durable blocks. |
| Cement / concrete bricks | 12% | Lowered from earlier 28%. |
| Steel & iron products (bars, rods, sheets) | 18% | No major change; remains under 18% slab. |
| Sand (natural) | 5% | Exempt earlier, now standard 5%. |
| Gravel and crushed stone | 5% | Commonly used for foundations and concrete mix. |
| Tiles (ceramic, vitrified, marble) | 18% | Brought down from 28%, reducing finishing cost. |
| Granite (polished) | 18% | Earlier 28%, now 18%. |
| Paints, varnishes, finishes | 18% | Earlier 28%, now more affordable. |
GST on Construction Services (2025)
| Type of Project | GST Rate | Input Tax Credit (ITC) |
|---|---|---|
| Affordable housing | 1% | Without ITC |
| Other residential projects | 5% | Without ITC |
| Commercial projects | 12%–18% | With ITC |
For detailed pricing based on your project type, check out our residential construction services or commercial construction solutions.
Example: Home Construction Cost Under New GST (2025)
Let’s say you are building a 1,200 sq. ft. house costing ₹25 lakh.
| Item | Cost | GST Rate | GST Amount |
|---|---|---|---|
| Cement & bricks | ₹6,00,000 | 18% | ₹1,08,000 |
| Steel | ₹4,00,000 | 18% | ₹72,000 |
| Tiles & flooring | ₹3,00,000 | 18% | ₹54,000 |
| Contractor service | ₹10,00,000 | 5% | ₹50,000 |
| Total GST Impact | ₹2,84,000 |
Result: With the revised rates, GST costs drop by almost ₹90,000 compared to the old structure — a clear saving for homeowners.
How to Control Construction Costs Under GST
At SP Constromate, we help clients reduce their financial burden by:
- Choosing materials smartly
Opt for low-tax materials like clay or fly ash bricks and natural sand. - Using affordable housing benefits
Projects that qualify enjoy just 1% GST on services. - Bulk purchasing
Buy directly from manufacturers to avoid dealer markups and hidden costs. - Professional guidance
Our experts provide tax-efficient planning and turnkey construction solutions for complete peace of mind.
GST: Pros and Cons for the Construction Sector
Advantages:
- Simplified two-slab system (5% and 18%) makes calculation easier.
- Transparent pricing and billing.
- Lower GST on major materials like cement, tiles, and paint.
Challenges:
- Residential builders still can’t claim ITC.
- Slight tax now applies to natural materials (like sand).
Overall, GST 2.0 has made home construction more cost-efficient and predictable.
Why Choose SP Constromate
At SP Constromate, we don’t just build — we help you plan every rupee wisely.
We provide:
- Transparent pricing with GST-inclusive estimates.
- Quality materials recommended for both cost and performance.
- Full legal compliance with the latest GST 2.0 norms.
Visit our contact page to discuss your project or request a free quotation today.
Final Thoughts
Understanding the GST rate on construction work with material helps you plan your home-building budget accurately.
With GST 2.0 reducing rates to 18% or less, home construction in 2025 is more affordable than ever.
At SP Constromate, we make the process simple, transparent, and cost-effective — so you can focus on building your dream home confidently.