Getting your project cost estimate right on a government contract requires accurate knowledge of GST rates on materials — because on most contracts, the contractor bears the material cost inclusive of all taxes. An error in GST rate assumptions can turn a profitable contract into a loss. Here is the current position on GST rates for key construction materials as of 2026.
GST Rate Summary: Key Construction Materials
| Material | HSN Code | GST Rate | Notes |
|---|---|---|---|
| Cement (OPC, PPC, all grades) | 2523 | 28% | Highest-taxed construction material |
| TMT Steel bars/rebars | 7214 | 18% | All Fe grades |
| Sand (natural river sand) | 2505 | 5% | If sold without processing |
| M-Sand (processed) | 2517 | 5% | Crushed stone sand |
| Coarse aggregates (stone chips) | 2517 | 5% | All sizes |
| Bitumen (VG-30, VG-40) | 2713 | 18% | Petroleum residue |
| Clay bricks (first class) | 6901 | 5% | Unbranded bricks |
| Fly ash bricks | 6815 | 12% | Higher than clay bricks |
| AAC blocks | 6810 | 12% | Autoclaved aerated concrete |
| HDPE pipes | 3917 | 18% | Plastic pipes and fittings |
| DI pipes (ductile iron) | 7303 | 18% | Iron pipes |
| MS/GI pipes | 7306 | 18% | Steel tubes and pipes |
| Ready-mix concrete (RMC) | 3824 | 18% | Higher than site-mixed concrete |
| Paint and waterproofing compounds | 3208/3214 | 18% | Varies by product |
| Timber (sawn for shuttering) | 4407 | 12% | Sawn timber |
| Steel plates/sections (shuttering) | 7208 | 18% | Flat-rolled steel products |
| Safety PPE (helmets, gloves) | 6506/3926 | 18% | Protective equipment |
Why Cement at 28% Matters Most
Cement carries the highest GST rate of any mainstream construction material at 28%. For a typical M25 RCC mix consuming 380 kg of cement per cubic metre, the GST component on cement alone is significant. On a large-volume concrete contract, cement GST can represent 4–5% of total project cost — a number that must appear correctly in your rate analysis, not be forgotten.
There has been repeated industry lobbying to reduce cement GST to 18% (to align it with steel and other materials), and this has been discussed at various GST Council meetings. As of May 2026, no reduction has been implemented. Monitor GST Council announcements — a rate cut, if it comes, would require bid price adjustments on running contracts depending on contract provisions.
GST on Construction Services (Works Contracts)
When you execute a civil works contract (rather than just supplying materials), the works contract attracts GST on the service component:
- Government civil works contracts (roads, buildings, bridges, drainage for government entities): 12% GST on the contract value
- Private construction works: 18% GST on works contracts
- Affordable housing works: 12% if specified
This is the GST you charge to your client (government department) on your running account bills. For Bihar PWD, Railway, Water Resources, and Rural Works contracts, you should be charging 12% GST on your gross bill value. Ensure your billing format includes the correct GST component and your GST registration is current and active.
Input Tax Credit (ITC) on Construction Materials
As a GST-registered contractor, you are entitled to claim Input Tax Credit (ITC) on the GST paid on your material purchases — offsetting it against the GST you collect on your works contract bills. In practice, if you pay 28% GST on cement and 18% on steel, and collect 12% GST on your government contract bill, there may be an excess ITC balance. This can be offset against other output tax liabilities or claimed as a refund.
Maintain proper GST invoices and purchase records for all material procurement — this is the basis for your ITC claim. Suppliers who do not provide valid GST invoices deprive you of this benefit, which is an effective cost increase.
E-Way Bill Requirements
Materials valued above ₹50,000 (for interstate movement) or as per state rules (for intrastate) require an E-Way Bill under GST. For construction sites receiving bulk deliveries of cement, steel, and aggregates, ensure your supplier generates the E-Way Bill for each delivery. Sites that fail to maintain E-Way Bill records face penalties at check posts and may have material seized — causing significant programme disruption.
Need a Material Supplier Who Provides Proper GST Invoices?
Every Vipprafest delivery comes with a valid GST invoice — so your ITC claim is always backed by proper documentation.
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