Whether you’re a contractor, builder, architect, or business owner in the construction industry, understanding the HSN code for construction work and SAC (Service Accounting Code) classifications is critical for seamless GST compliance. With dozens of materials, quick billing processes, and service types involved, even minor misclassifications can lead to penalties and tax errors.

This guide breaks it all down for you,  without confusion, just clear, accurate information tailored to what you’re searching for.

What is the HSN Code and Why Does it Matter in Construction Work?

HSN codes are globally recognized codes used to classify goods for taxation purposes, while SAC codes are used to classify services under GST in India.

In the construction sector:

• Goods like cement, bricks, tiles, and rods are classified using HSN codes.
  
• Services like residential, commercial, and infrastructure construction use SAC codes.
  

Using the correct codes is legally mandatory and ensures:

• Accurate GST rate application
  
• Correct invoice generation
  
• Ease in GST returns and audits
  

HSN Code for Construction Work (With GST rates)

Here’s a simplified table of essential construction materials and their GST classification:

Material	HSN Code	GST Rate
Ordinary Portland Cement	2523	28%
Steel rods and bars	7214	18%
Sand (natural & crushed)	2505	5%
Bricks (non-refractory)	6901	5%
Marble & Granite (raw)	2515	12%
Electrical switches/wires	8536	18%
Plastic pipes & fittings	3917	18%
Tiles (ceramic or vitrified)	6907	28%

SAC Codes for Construction Services

Unlike materials, construction services are classified under the SAC code 9954 with subcategories to reflect the specific type of service.

SAC Code	Service Description	GST Rate
995411	Construction of individual houses, residential buildings	18%
995412	Hostels, dormitories, housing societies	18%
995413	Industrial complexes and plants	18%
995414	Commercial buildings (shops, malls, offices)	18%
995421	Roads, highways, bridges, tunnels	5% or 12%
995419	Repairs, renovations, and restoration of any structure	18%

GST Rates for Construction Work in India

GST rates for construction work depend on project type, nature of service, and availability of ITC (Input Tax Credit):

Project Type	GST Rate	ITC
Affordable housing (under scheme)	1%	No
Other residential construction	5%	No
Commercial construction	12%	Yes
Government infrastructure works	12%	Yes
General works contract services	18%	Yes

What are the Common Mistakes to Avoid?

Using incorrect codes: Many SMEs apply the same HSN code for construction work across different types of materials.

Ignoring SAC sub-categories: Not all construction services fall under one umbrella.

Mismatched GST rate & invoice: This can trigger scrutiny during filing or audit.

Not updating changes: GST council updates rates and classifications periodically.

FAQ’s

1. What is the HSN code for construction services under GST?
Services are classified using SAC codes, not HSN. The SAC code for construction services is 9954, with sub-codes for residential, commercial, industrial, and infrastructure projects.

2. Are construction materials taxed differently than construction services?
Yes. Materials like cement, steel, and tiles are taxed using HSN codes at 5% to 28%, while services like building construction are taxed using SAC codes at 5%, 12%, or 18%, depending on the project type.

3. Can a builder claim Input Tax Credit (ITC) on construction materials?
ITC is allowed only in certain scenarios, such as when the construction is for further supply (not for self-use) or in commercial projects where GST is charged at 12% with ITC.

4. What is the SAC code for renovation and repair services in construction?
The SAC code is 995419. It covers activities like structural alterations, repairs, and refurbishment of existing buildings, and it attracts 18% GST.

5. Do government construction contracts have different GST rules?
Yes, government-related construction contracts often attract 12% GST with ITC, but special exemptions or lower rates may apply depending on the scheme or department involved.

6. Is it compulsory to mention HSN code for construction work on invoices?
Yes. For businesses with turnover exceeding ₹5 crore, HSN/SAC codes must be mentioned on B2B invoices. For others, 4-digit or 6-digit codes may suffice depending on the turnover threshold.

7. Where can I find the most up-to-date list of HSN and SAC codes?
The official GST portal (https://www.gst.gov.in) regularly updates the list of HSN and SAC codes. You can also refer to CBIC circulars or consult a certified GST practitioner.

Conclusion

Navigating GST in the construction industry can seem complex—but once you understand why HSN code for construction work and SAC codes are important , everything becomes clearer. Whether you’re dealing with raw materials like steel and cement or offering services like residential construction, the right classification ensures accurate and quick billing, seamless GST returns, and fewer compliance issues.

From affordable housing projects to highway construction and renovation services, each activity under construction has a distinct GST rate and code. By staying updated, you not only save time and avoid penalties but also strengthen your business’s credibility with clients and the tax authorities.

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