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GST Effect on House Construction

GST Effect on House Construction



Building one’s own home is almost every individual’s dream and it requires both planning as well as courage. While, deciding upon getting a home loan is the most crucial step, understanding how it works or will work in the coming months is even more important. If you are building a home with an alluring image in mind, the first thing that anyone asks is, ‘Will GST affect home construction?’. So, will it affect home construction and real estate sector in general?


The GST Council has moved the real estate sector under the GST boundaries, only partially that too via works contracts. So that means, in a simple statement, that these will be at 12 percent slab with GST in action. With that in mind, it is worth mentioning that a homebuyer has to pay various indirect taxes, including excise duty, VAT, and service tax, which sums up to a tax of about 11 percent, excluding stamp duty. (Taxes have been fetched from Source 1 & Source 2)


Who pays what, and how much?

  • Under-construction real estate properties will be tabulated as the supply of services and hence will be liable to pay GST.
  • Sale of land and completed real estate properties are exempted from GST.
  • As per ICRA note, GST for real estate can be either 18 percent or 12 percent.
  • If the construction of buildings predetermined for sale to a buyer includes land in the sale value, the payable GST will be 12 percent.
  • If the land and construction values are defined through separate agreements, the payable GST will be 18 percent.


What gets consumed, what remains intact?

  • VAT (value added tax) and service tax that is currently a part of costs of under-construction properties, will be subsumed by GST.
  • No change will be seen in the stamp duty and registration charges for land, completed properties, and under construction properties. GST is not expected to subsume stamp duty and registration charges.


According to Mr. Jain, ICRA, the GST rates are higher than the current tax modules and tax rates for the individual buyer, in most of the states, but the seemingly higher GST rates should get balanced out if the developers pass on the perk of higher ITC (Input Tax Credit) available to them. In simple words, the developers are expected to pass the amount they earn as tax (ITC), in order to reduce the overall impact of high GST rates. He also added that, at the moment, a few indirect taxes paid by the developer, like CST on materials used for construction and excise duty aren’t taken into view as input. With GST in picture, the taxes at each level will be lowered as compared to proposed GST rates, which is expected to lower the total project cost in the near future.


Real estate has always been that one sector, where price control always seems out of hand. Many dreams of building a home get shattered with this unexpectedly high cost of the home construction, and yet developers keep complaining about their own problems in managing all this. This also results into late home constructions, in fact very very late. GST in real estate is a ray of hope in the direction of affordable housing scheme by the government, and it is expected to benefit both the buyer as well as the developer. The developer will have to invest less (with reduced levels of taxes), and hence buyer will pay less (due to less taxes being paid by the developer).

Why Is The Government Powerless To Stop Clay Bricks?

Numerous directives, guidelines and rules have been issued by various government bodies regarding clay bricks, but the situation on the ground is not changing. The government has not outright banned burnt clay bricks, but the urgency of the many directives issued over the years makes it clear that alternatives need to be adopted in place of red clay bricks.

The main reason is that it is financially unviable for the numerous small and medium clay brick kilns to either move to a better clay brick production method or shift to green alternatives such as fly-ash based bricks or blocks. They continue to operate disregarding the directives. Also, the government officials do not monitor these smaller kilns stringently. The bigger kilns move to clay brick production methods that are less polluting and are able to obtain environmental clearances but the numerous smaller kilns continue without any change.

The unorganised clay brick industry employs way too many people. The government cannot outright ban the production of red clay bricks and face a huge labour unrest. On the other hand, due to India’s booming population, growth and demand for housing, demand outstrips the total supply of building materials, including red clay bricks and better technological alternatives such as fly-ash bricks and other fly-ash based building materials such as AAC and CLC blocks. The manufacturing facilities of these modern alternatives are steadily rising but face the stumbling block of irrational demand for red clay bricks from consumers and contractors. Misconceptions and the tendency to hold on to the traditional ways of using the red brick continue creating demand for these polluting clay bricks. Consumers tend to think that if a contractor wants to use grey bricks or blocks they are compromising on quality.

Thus the vicious cycle continues. The shift towards a better and modern brick/block industry will be slow. Change, however slow, is happening. Consumers are becoming more educated about the overall cost benefits of newer technologies such as AAC blocks. Contractors are updating their technical know how and also advising their clients to go for the greener alternatives. The brick kiln workers are demanding better wages and many are moving to organised sectors of employment. The wasteful & low-profit margin brick kilns are going out of business. Foreign companies are enacting strict rules about sourcing of materials in their supply chain and not purchasing from kilns where labour exploitation happens. NGOs and activists, both domestic and foreign, are helping create change in the archaic methods of production. The organised sector of large factories making AAC blocks, CLC blocks & fly-ash bricks is steadily increasing. The government is waking up to the pollution problem, amidst the global climate change crisis, and enacting guidelines and regulations at an increasing frequency. Hopefully, all these changes and forces will converge to cause a tipping point, a paradigm shift, somewhere in the near future, and change the Indian brick industry for good.

What is needed is better communication and education about the facts and ground reality among all related parties. That is what this blog is committed in doing and will continue to do so. Magicrete strives to create a better developed India and we hope to reach the tipping point soon. We want to take India from being a developing country to being a developed country, at least in the construction industry, as soon as possible.


Bricks are usually red, but not for long, in future when you will think of bricks, a range of different shapes and sizes will come to mind – AAC blocks, CLC blocks, fly ash bricks, etc. and you will think of the colour grey, the colour of fly ash.


Red clay bricks get their colour from the iron-oxide in the valuable fertile topsoil which is used to make them. A huge amount of agricultural soil gets wasted and locked-into structures as a result of red clay bricks. Surging housing & construction growth in India has majorly highlighted the problem of red clay bricks like never before.


Red clay bricks are completely banned in some areas like Gurgaon but in the entire country there is no blanket ban as such at the moment, only guidelines and directives such as these MoEF notifications – issued in 2008, issued in 2013. Many producers require Environmental Clearances (ECs) and pollution control board clearance but state governments and national authorities (The Supreme Court, The Ministry of Environment, Forests and Climate Change (MoEF), The Central Pollution Control Board (CPCB) and The National Green Tribunal (NGT) among others) are in the process of formulating complete bans. Rules vary across the country but it is clear that everyone wants to reduce and eventually altogether cease the manufacturing of burnt red clay bricks. Using fly-ash for bricks is mandatory in a 100km radius around thermal power plants and for constructing government buildings in some states.


Illegal mining of soil is a huge problem. The unorganised sector doesn’t want to take the hassles of organising and managing the supply of better materials and prefers to “just take the soil from somewhere” and make bricks with it. While the organised sector of AAC and CLC blocks works professionally by managing the raw-materials for production more efficiently. Earlier fly-ash used to be dumped in the forests but now fly-ash brick, AAC block and CLC block makers use the same wasted fly-ash and make better bricks than the burnt red clay bricks which deplete soil and cause massive pollution apart from using a huge amount of energy during production.


Despite the urgent directives, implementation is not done due to ever-increasing demand for construction materials. To be frank, most people don’t care if the environment gets hurt “a little” for their profits. They are wrong, not just ethically but even profits and business wise, as the new improved bricks are cheaper to manufacture as well as build and maintain structures with.
There are already civil court cases such as this related to brick manufacturing. Resistance to change and preference for the “traditional methods” of building are not an excuse for harming the environment. Despite directives and the logic and economics in favour of the alternatives of red clay bricks, it is a pity that the construction sector in fast developing India, which is the 2nd largest manufacturer of bricks in the world after China is, is still clinging onto past traditions despite better new alternatives.

Magicplast Wall Putty – Making Walls Look Beautiful For Years

You spend your hard earned money to build your dream home and decorate it as per your tastes and preferences. Invest a lot of time in choosing the best paint in the market so that your home walls look stunning. And, in a few years time, you realize that all the money and effort that you had put in is wasted. Reason? Wrong wall putty that results in peeling and color fading.

But don’t lose heart as the MagiPlast Wall-Putty is here to help you out. It is a polymer modified white cement based wall putty specially developed as a finishing coat to cover the unevenness and pinholes created by plastering, and to prepare the wall/surface for painting. Its application helps you achieve a smoother finish on your walls, and allows expensive paints to last longer. With a little maintenance the walls remain visually appealing for many years.

An that’s not all, it offers an array of features that help it stand out in the market as an unmatched product. These include high water resistance, excellent work ability, UV resistance, strong bonding and ease of use.

Simply put, the application of MagiPlast Wall-Putty leads to a host of advantages like:

  • Cost savings as application of primer isn’t required
  • Reduced paint consumption
  • Superior paint finish
  • Protection of paint from flaking, dampening and peeling off

Rahul Raj Mall – A Shining Example Of Cost-Effective Construction With Magicrete AAC Blocks

Located in the heart of the sprawling city of Surat in Gujarat, the Rahul Raj Mall is one of the leading retail and entertainment destinations. Developed by RahulRaj Estates Pvt. Ltd., this mall offers 400,000 sq. ft. of retail and 60,000 sq. ft. of Multiplex space.

While, from outside it looks like any other malls, which you can find in various Indian cities witnessing a retail revolution, there’s a lot more than meets the eye. Owing to the use of Magicrete AAC blocks, it is one of the finest examples of cost-effective and environment-friendly construction.

It has a construction area of 200,000 sq. ft. and has three floors. By employing Magicrete AAC blocks, Harsh Constructions, the construction company, was able to reduce the RCC cost by 8-10%. Similarly, mortar and plaster cost was lowered up to 15%, and the construction time was halved.

In addition to the aforementioned tangible benefits, the use of Magicrete AAC brought a host of intangible benefits. These include better wall surface in comparison to brick walls, flexibility to choose from a wide range of AAC blocks sizes, fast completion of work and minimal wastage with larger blocks, etc. No wonder, Mr. Gaurav Patel, Project Engineer says – “Magicrete AAC blocks save up to 15% cost in plaster and up to 10% in mortar of your whole cast of project with their optimum utilization.

Machine-Based Wall Plastering – A Faster And Cost-Effective Alternative To The Traditional Labour-Intensive Way

Time and cost overruns are a big problem in the Indian real estate industry. Owing to a variety of reasons projects get delayed, significantly affecting the bottom-line of developers. The late hand over of properties further leads to lower buyer satisfaction.

In such a scenario, it is imperative for developers to employ latest technologies to cut costs and save time. Machine-based plastering could play a key role in achieving these objectives. It allows developers to increase the rate of plastering by 3 times regardless of the material applied. Provided the background work is already done, a spray plaster machine can cover an area of 1750-2000 sq. ft. in an 8-hour shift. Also, plaster spraying allows a plasterer to skim a drywall more than five times faster than using a hand float to apply it.

With plastering time greatly reduced, developers get more time to work with the material on the wall as opposed to earlier, resulting in better quality output. Here’s how machine-based plastering has an edge over traditional plastering.

  1. Minimal movement of material as machines allow for operation at numerous locations, while construction materials remain at one place.
  1. A maximum of 4 workers are required for set-up and operation.
  1. Helps ensure consistent quality across the project.
  1. Plaster can be applied evenly to penetrate gaps and spaces, which leads to lesser chances of cracking and seepage.
  1. The need to clean up is greatly reduced, as movement of construction material is limited.

Keeping this tremendous potential of spray plastering in mind, Magicrete has introduced the spray-friendly versions of Magicplast Gypsum Plaster. Manufactured in controlled conditions employing state-of-the-art technologies, these plasters have the right quality of sand and zero moisture content to avoid any room for inaccuracy in water-cement ratio.

Clearly, machine-based plastering scores over the traditional way in terms of both cost and quality. It can go a long way in enhancing the competitiveness of developers and providing the end-users with low-cost, good quality housing.

Do It Yourself – Make Beautiful Walls with MagicPlast Ready Mix Plaster


MagicPlast Ready Mix -220 is a polymer-modified premixed cement base plaster, which is suitable for both inner as well as outer walls. Convenient, easy-to-use, stronger and developed to bind better to its substrate, it provides an even surface to ensure faster and efficient tilling. Continue reading Do It Yourself – Make Beautiful Walls with MagicPlast Ready Mix Plaster

Do It Yourself – Build Strong Walls With Magicrete AAC Blocks & Magic Bond


Known for their lightweight and unmatched strength, AAC blocks are gradually changing the construction landscape worldwide. Their impeccable heat resistance and sound proofing properties further make them an ideal building material. And, the best thing is it is very easy to join them together and create a wall. This becomes possible with Magicbond – Block Joining Adhesive, which is a factory mixed thin bed mortar made up of cement, graded sand and blended with polymers. Continue reading Do It Yourself – Build Strong Walls With Magicrete AAC Blocks & Magic Bond

Unmatched Benefits Of Green Building Material

ENVIRONMENTGreen buildings don’t need any introduction now. Today almost everyone is aware about the green buildings and the materials used in constructing these buildings. These green building materials not only speed up the construction process, but also have various other benefits. These products are equally beneficial for the environment, occupiers and the surroundings. Sustainable buildings constructed by green building materials have limited consumption of natural resources. Continue reading Unmatched Benefits Of Green Building Material

Do It Yourself – Fix floor and wall tiles effortlessly with Magicbond Tile Laying Adhesive


Broken or chipped tiles are quite common in our homes. We often realize that a few of them need urgent replacement. And, calling a mason in such situations becomes quite expensive. Also, most of the times masons don’t turn up for such small jobs. Continue reading Do It Yourself – Fix floor and wall tiles effortlessly with Magicbond Tile Laying Adhesive

Do It Yourself – Carry out superb internal plasterwork without any professional help

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MagicPlast Gypsum Plaster from Magicrete is a ready-to-use gypsum-based plaster coating product that is suitable for all kinds of internal walls made of AAC blocks, bricks and even stones. With special additives, it helps you achieve superior finish on your walls, and has higher coverage, which means you can plaster a larger area in the same amount of plaster in comparison to other gypsum-based plaster products. Continue reading Do It Yourself – Carry out superb internal plasterwork without any professional help

Get Benefitted From the Lightweight Concrete Blocks

Environmental protection is one of the major concerns today. People look for eco-friendly options in almost every field. Even for the building construction, now constructors look for environ friendly and cost effective techniques and one of the options they have got is lightweight concrete blocks. These are much better than normal concrete not just in terms of weight, but also in terms of price and quality. Continue reading Get Benefitted From the Lightweight Concrete Blocks

Magicrete –Turning the Swachh Bharat dream into reality

As the Prime Minister’s pet project the ‘Swachh Bharat Abhiyan’ gains momentum, there is a renewed emphasis on exploring new ways to keep our cities and villages clean all round the year. Government bodies and NGOs are increasingly looking out for technologies that ensure generation of minimal waste and optimum utilization of resources. Continue reading Magicrete –Turning the Swachh Bharat dream into reality

Thin Bed Mortar – Making speedier construction with AAC possible

As AAC blocks weigh less than 18 kg, they can be easily carried from one place to another, significantly reducing the time involved in construction. Now, when you have AAC blocks at the right place quickly, the challenge is to glue them together to construct a load bearing or non-load bearing wall. This goal can be easily realized with thin bed mortar. Continue reading Thin Bed Mortar – Making speedier construction with AAC possible

MagicBond –The tile-laying adhesive for superb protection against shrinkage cracks

When you spend huge sums of your hard-earned money on floor or wall tiles, the last thing you would like to see is cracks appearing on them in due course of time. As replacing them is a costly and time-consuming affair, it is imperative for you to choose a suitable tile-laying adhesive that can make them last long. Continue reading MagicBond –The tile-laying adhesive for superb protection against shrinkage cracks