Buying construction materials in India? You’ve probably noticed that the GST on building materials isn’t the same everywhere. That’s because, under India’s GST system, rates can vary from state to state depending on location, material type, and local tax policies. In this guide, we unpack why the same cement might cost you more in Kerala than in Maharashtra—even after GST. We’ll clearly explain state-wise rates, share real-world examples, mention local brands and sellers, and help you plan smarter for your next project. Think of this as a friendly chat with your local contractor—simple, clear, and backed by up-to-date research.
1. Basics First: What Is GST and Its Structure?
GST (Goods and Services Tax) replaced old VAT, excise, and various other indirect taxes in 2017. It’s a dual tax system:
- CGST – Central Goods & Services Tax
- SGST – State GST (or UTGST in union territories)
- IGST – Integrated GST for inter-state transactions
Every time you buy a cement bag in your state, both CGST and SGST are split equally between the centre and state. If it’s an inter-state purchase, you pay IGST and the destination state collects the tax.
Yet, despite a unified framework, states can influence local implementation—leading to rate differences.
2. Why Do GST Rates on Construction Materials Vary by State?
Here are the five main reasons:
A. State Choice of Local Tax Policies
Though GST rates are nationally decided by the GST Council, states can occasionally recommend local adjustments through SGST components—especially on cesses or compensation cess. Some states tweak rates for infrastructure growth or affordability.
B. Interstate vs Intrastate Purchase
- Intrastate (within same state): You pay CGST + SGST = standard rate (e.g. 18%).
- Interstate (across states): IGST applies. Though overall % may look similar, ledger entries and cash flows differ.
C. Type & Grade of Material
Different materials fall under different GST slabs—5%, 12%, 18%, or 28%—regardless of state. However, the state can vary whether it levies SGST or IGST based on origin/destination.
- Essentials like sand, bricks: 5% GST
- Cement: 28% GST
- Steel/TMT: 18% GST
- Tiles/glass/paint: 18–28%
D. Central vs State Collections
States receive revenue through SGST or a share of IGST. They may prefer purchases to be intrastate, encouraging local supply—even if GST rates are similar numerically.
E. Compliance & Classification Policy
States may interpret HSN codes or product classifications differently—categories like “artificial stone tiles” can shift slabs between 18% and 28% based on classification.
3. Dissecting the GST Slabs on Common Materials
Here’s a helpful look at current slabs:
| Material | Tax Slab | Notes |
| Natural sand, pebbles, gravel | 5% | Basic necessities |
| Non-baked & fly-ash bricks | 5% | Brick types fall under 5% |
| Marble, granite blocks | 12–28% | Depending on finishing |
| Cement | 28% | Highest GST slab |
| Steel, TMT bars | 18% | Common reinforcement |
| Ceramic/wall/floor tiles | 18–28% | Vitrified/high-end at 28% |
| Sanitaryware, pipes, paint, wiring | 18–28% | Varies with type |
Notice how widely GST slabs vary—even within similar product groups.
4. State-wise Examples & Case Scenarios
State: Maharashtra — Intrastate contractor
- Buys cement from a Pune dealer: pays 28% GST broken equally: 14% CGST + 14% SGST
- Nationwide steel via IGST: pays full 18% IGST, input credit adjusted later
State: Tamil Nadu — Import from out-of-state
- Tiles from Gujarat: IGST at 18–28%
- Local bricks: intrastate purchase at 5% CGST+SGST
States like Gujarat or UP may add minor cesses but GST Council tightly regulates that.
5. Real-People Story from Bengaluru
A contractor in Bengaluru shared his experience:
“When we bought TMT bars locally, GST charge was ₹18,000 on ₹1 lakh. But importing from Chennai meant ₹18,000 IGST—and we had to wait extra for IGST credit from central GSTN.”
Local purchase sped up credit claims and saved paperwork delays.
6. What Builders & Suppliers Should Know
- Check HSN codes carefully—small changes alter rate slabs dramatically.
- Verify supplier registration state—this decides whether CGST+SGST or IGST applies.
Local example: UltraTech Cement (Maharashtra) vs JK Lakshmi (Rajasthan) — both 528 HSN, but state of billing determines intrastate vs interstate.
7. Why This Matters for You and Your Budget
- Direct Cost: Buying cement with 28% GST adds ₹2,800 on ₹10,000 purchase.
- Indirect Delay Costs: Interstate IGST credit might take 30–45 days to fully reflect.
- Cashflow Management: Local buys may keep credit flows faster.
- Tender Pricing: Accurate GST inclusion avoids losing bids or margins.
8. Tips to Optimize GST on Your Materials
- Local sourcing helps—opt for intrastate suppliers when feasible.
- Classify right—don’t push premium tiles into 18% by misclassification.
- Track IGST credits—make entries during filing for timely offset.
- Use Composition Scheme? Not available for construction—work with full GST.
- Update contract bills—mention if HSN slab changes post-delivery.
9. Tracking Updates State-to-State
- GST slabs are national—minor state tweaks are rare, mostly via SGST rates.
- But product category classifications can shift—stay updated via CBIC and ClearTax.
10. Final Thoughts
Yes, GST on building materials varies by state—but primarily due to purchase location (intrastate vs interstate) and how suppliers classify goods. The slab (5–28%) remains national, however local procurement can smooth out cash flows and tax returns.
Planning procurement smartly—confirmed rates, correct HSN, local sourcing—can save you money, time, and paperwork. As of 2025, these variations are typical in major cities across India.
Source : fulinspace.com