Introduction
Since the launch of the Goods and Services Tax (GST) in 2017, tax rates and structures have continued to evolve across sectors. A notable change came into effect on 1st April 2022, reshaping the GST landscape for bricks, fly ash bricks, blocks, roofing tiles, and similar construction materials.
This update, notified through Notification No. 01/2022 and 02/2022 – Central Tax (Rate), introduced a dual GST rate structure.
In this post, we’ll break down the change, its conditions, and its impact on suppliers, builders, and traders in the construction sector.
GST on Bricks Before 1st April 2022
Prior to the amendment:
- GST Rate: A flat 5% GST applied to clay bricks, fly ash bricks, and roofing tiles.
- ITC (Input Tax Credit): There was no distinction based on whether a supplier availed ITC.
- Uniformity: All suppliers, whether they claimed ITC or not, charged 5% GST.
Dual GST Rate Structure from 1st April 2022
From 1st April 2022, GST on bricks and related materials follows a dual-rate structure based on ITC availment:
| Product | HSN Code | GST Rate (with ITC) | GST Rate (without ITC) |
|---|---|---|---|
| Fly Ash Bricks / Fly Ash Blocks / Fly Ash Aggregate (≥90% fly ash) | 6815 | 12% | 6% |
| Bricks of fossil meals / similar siliceous earths | 6901 00 10 | 12% | 6% |
| Building Bricks | 6904 10 00 | 12% | 6% |
| Earthen / Roofing Tiles | 6905 10 00 | 12% | 6% |
Key point: The supplier must choose either to charge 12% GST and claim ITC, or 6% GST without availing ITC.
Detailed Overview of the Notifications
📝 Notification No. 01/2022 – CT (Rate)
- Amended Notification No. 1/2017 – Central Tax (Rate)
- Removed entries from Schedule I (2.5% CGST = 5% GST)
- Added new entries under Schedule II (6% CGST + SGST = 12% GST)
📝 Notification No. 02/2022 – CT (Rate)
- Granted concessional 6% GST (3% CGST + 3% SGST) subject to conditions under Section 11 & Section 16 of the CGST Act, 2017
Notification can be downloaded by clicking here.
🔗For official notifications and Circulars, visit CBIC’s Website
Conditions to Avail 6% GST Rate (Without ITC)
Suppliers opting for the 6% rate must follow:
1️⃣ No ITC claim: No input tax credit on goods or services used exclusively for such supply.
2️⃣ Proportionate ITC reversal: Where inputs are used commonly across supplies, proportionate reversal as per Section 17(2) and Rule 42 of CGST Rules is mandatory.
Non-compliance = 12% GST applicable with ITC allowed.
Practical Impact on Suppliers and Builders
✅ Pricing Strategy: Suppliers must weigh the benefits of ITC (at 12% GST) vs. competitive pricing (at 6% GST).
✅ Invoicing & Documentation: Clear invoice declarations and accurate ITC ledger management are crucial.
✅ GST Return Filing: Proper bifurcation in GSTR-1 and GSTR-3B is vital to prevent mismatches.
✅ Impact on Construction Sector: Builders must assess whether supplier invoices are ITC eligible, impacting project costs.
Industry Challenges Post 1st April 2022
⚠ Switching Between Rates: Can a supplier alternate between 6% and 12% across periods? The law doesn’t clearly prohibit or permit frequent toggling.
⚠ Vendor-Buyer Preferences: Builders often demand ITC-compliant (12%) invoices, while smaller brick manufacturers prefer the 6% route.
⚠ Complex Contracts: Bundled contracts involving bricks and other materials create classification ambiguities.
Conclusion
The dual GST rate on bricks aims to tighten the ITC chain and improve tax compliance. However, it has introduced operational challenges for suppliers and builders alike. Businesses must ensure careful documentation, transparent pricing, and compliance with GST rules to avoid pitfalls.
FAQs
1️⃣ Can I switch between 6% and 12% rates anytime?
👉 The law doesn’t explicitly restrict switching, but frequent changes could invite scrutiny.
2️⃣ What if I wrongly charge 6% and claim ITC?
👉 You could be liable to pay the differential tax, interest, and penalties.
3️⃣ Are all bricks covered under this dual-rate structure?
👉 Yes, the structure covers fly ash bricks, building bricks, earthen tiles, and bricks of fossil meals.
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