GST on Construction Services — Rates, Works Contract & ITC (2026)
GST on construction services ranges from 12% to 18% depending on the nature of work. Works contracts for commercial buildings attract 18%. Government infrastructure projects and affordable housing attract lower rates. ITC on construction of immovable property for own use is blocked.
Quick Reference
Commercial Works Contract
18%
Govt/Infrastructure Contract
12%
Pure Labour Contract
12%
SAC Code
9954
ITC for own building
Blocked
GST Rate
12% / 18%
SAC 9954
Works Contract — Commercial Building — 18%
Construction, renovation, or repair of commercial buildings, factories, offices, and non-residential complexes under a works contract attracts 18% GST (9% CGST + 9% SGST).
Works Contract — Government / Infrastructure — 12%
Works contracts for government buildings, railways, metro, road construction, and public infrastructure attract 12% GST. This was reduced from 18% to support infrastructure development.
Pure Labour Contracts — 12%
Pure labour supply for construction (no material) attracts 12% GST. The worker provides only labour; the client provides materials.
Sub-contracting — 12% (Govt) / 18% (Private)
Sub-contracting rates mirror the main contract — 12% for government project sub-contracts, 18% for private/commercial.
ITC on Construction — Blocked for Own Use
ITC is blocked on goods or services used for construction of an immovable property for own use (Section 17(5)(c)). A builder constructing for sale can claim ITC; a company building its own office cannot.
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No. ITC is blocked on works contract services for construction or renovation of immovable property that you own and use. This is under Section 17(5)(c).
Partially. For under-construction flats sold before occupancy certificate, ITC proportional to taxable supply is allowed. The 80% from registered dealer rule applies.
SAC 995411 (residential construction), SAC 995412 (commercial construction), SAC 995421 (civil engineering works like roads/bridges).
Yes. Repair and maintenance services for buildings attract 18% GST as works contract services.
