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The government of India launched the Goods and Services Tax (GST) to incorporate all the indirect taxes. The connection between the Goods and Services Tax (GST) and real estate is that GST on construction materials has eased the taxation system by combining various state and federal taxes. Before the introduction of GST in India, the tax levied on goods and services was utterly complex. It was because there were many taxes imposed on the goods. But with the introduction of GST in July 2017, the process has been made simpler by eliminating excise duties, Octroi, VAT, customs duties, etc.
GST on construction materials is necessary as the real estate industry employs approximately thirty million people across India. In order to govern the activities under construction, a "Works Contract" was initiated.
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What is the "Works Contract" in GST on Construction?
The work contract involves all agreements related to constructing a structure on land. Moreover, it specifies the raw materials and products needed for the completion of any project. For example, the price of bricks, cement, paint, wallpaper, and bathroom fittings will be included in the GST for residential house construction. The GST on construction contracts includes activities like:
Building
construction
Fabrication
Completion
Fitting out
Installation
Improvement
Modification
Maintenance
Repair
Renovation
Alteration of immovable property
The buildings or structures that are a part of the GST on construction contracts are apartments, residential complexes, residential units, industrial buildings, multi- and single-storey buildings, and commercial buildings.
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Based on the Central Goods and Services Tax, taxpayers only have to pay GST on the under-construction property, which means there is no need to pay GST on ready-to-move-in property. However, although many people know the rule mentioned above, they still face a glitch in calculating the GST on under-construction property. If you are one of them and wish to solve this issue, you can learn the GST rates on construction materials. Continue reading this article and discover more!
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GST on Construction Materials
GST Rate on Sand:
All kinds of natural sand, i.e., whether coloured or non-coloured or any metal-bearing sand, are 5% whereas GST on construction materials like tar sand, oil shale or bituminous is 18%.
GST Rate on Gravel and Crushed Stone:
These items are mainly used for concrete aggregation for road metalling or for other ballast (shingle, flint, etc.). The GST on the gravel and crushed stone used in concrete is 5%.
GST on Marble and Granite Blocks:
The standard GST rate for such building materials is 12%, whereas granite, hand, marble, and travertine other than blocks seek a GST rate of 28%.
GST on Building Stone:
These items include basalt, sandstone, porphyry, and other building stones. The GST on building stones is 5%.
GST on Cement:
All types of cement, like Portland, alumina, slag, super sulphate, and hydraulic cement, have a GST of 12%.
GST on Iron & Steel:
These products are available in rolls, wires, blocks and other forms at 18%.
GST Rates on Tiles:
Earthen or roofing tiles attract a GST of 5%.
Glazed ceramic flags, paving, or wall tiles attract a GST of 28%.
Flooring tiles made of bamboo attract a GST of 18%.
Cement, artificial stone, or concrete-made titles have a 28% GST.
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GST on the Interior Furnishing Materials of a Building
Copper wire:
GST of 28% is applicable on the insulated wire and cable. It primarily consists of electrical machinery, sound recording equipment, TV audio and video equipment, reproducers and their accessories.
Paint and Varnish:
This category mainly includes enamels and lacquers, including natural and synthetic polymers. The pain and varnish categories are taxed at 28% GST. Moreover, resin cement, grafting putty, and mastics are taxed at 28% GST.
Bathroom Fittings:
Bathroom fittings like ceramic sinks, washbasins, closet pans, sanitary fixtures, urinals, and cisterns are levied at 28% GST, except for pipe fittings. Pipe fittings and tubes (which primarily include couplings, elbows, and sleeves) of copper, plastic, nickel, aluminum, iron, or steel have a GST of 18%.
Through this blog we have learned, the construction services feature taxes that connect to many real estate businesses; can further be analysed as a part of how GST is appropriate for real estate. You can use the above-mentioned information (GST on construction materials), if you are recently engaged in some construction-related work at home or office.
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