Goods and Services Tax (GST) has transformed India’s tax system since 2017, impacting various industries, including brick manufacturing. This article covers GST rates on bricks with their HSN codes, recent updates, and impact on manufacturers, distributors, and construction professionals. Whether you’re in production or construction, this guide will help you navigate GST regulations effectively.
Table of Contents
Latest GST Rate Updates for the Brick Industry
As of April 1, 2022, regular building bricks, fly ash bricks, sand lime bricks, blocks, and roofing tiles are taxed at 12% GST rate with Input Tax Credit (ITC) and 6% GST rate without ITC. Additionally, a government notification issued on March 31, 2022, allows these products to opt for the composition scheme. These significant revisions to the GST rates, introduced by the GST Council, have a notable impact on both manufacturers and consumers.
This change represents a substantial shift from the previous rate of 5% GST on bricks, reflecting the government’s efforts to align tax rates more effectively with the current economic scenario and market demands. The revisions also aim to streamline tax compliance, particularly for small and medium-sized enterprises in the brick industry.
GST Rates for Different Types of Bricks with HSN Code
Understanding the GST rates for various types of bricks is essential for manufacturers to accurately price their products and manage their tax liabilities. Here’s a detailed look at the current rate of GST for different types of bricks with HSN code as per the GST council:
Type of Brick |
HSN Code |
GST Rate |
| Building Bricks |
6810 |
12% |
| Fly Ash Bricks |
6815 |
5% |
| Fossil Meals Bricks or Bricks of Similar Siliceous Earths |
6901 |
12% |
| Paving Bricks |
6904 |
12% |
| Refractory Bricks |
6902 |
18% |
| Bricks of Pressed or Moulded Glass |
7016 |
18% |
| Earthen or roofing tiles |
6905 10 00 |
12% |
These rates are determined based on the nature and usage of the bricks. For instance, fly ash bricks, which are considered environmentally friendly, attract a lower GST rate compared to traditional building bricks.
Previous GST Rate Structure for Brick Manufacturing
Before the recent updates, the GST rate structure for bricks was different, with variations that had notable impacts on the industry. Here’s a comparison of the previous and current GST rates:
Type of Brick |
Previous GST Rate |
Current GST Rate |
| Building Bricks |
5% |
12% |
| Fly Ash Bricks |
12% |
5% |
| Sand Lime Bricks |
5% |
12% |
| Paving Bricks |
5% |
12% |
| Refractory Bricks |
18% |
18% |
Comparison of GST Changes for Brick Manufacturers
Here’s a comparative overview of the key GST changes affecting the brick industry, highlighting the shifts in registration thresholds and composition scheme eligibility.
Particulars |
Earlier |
As of Now |
| Turnover Threshold for GST Registration | Required if annual turnover exceeded Rs. 40 lakhs | Reduced to Rs. 20 lakhs per Notification No. 03/2022-Central Tax |
| Composition Scheme Eligibility | Available if annual turnover did not exceed Rs. 1.5 crores | Not available; special scheme allows 6% GST without ITC (Notification No. 02/2022-Central Tax) |
| GST Rates for Non-Composition Scheme | 5% GST with ITC for manufacturing and trading | Increased to 12% GST with ITC (Notification No. 02/2022-Integrated Tax (Rate)) |
Impact of GST on the Brick Industry
The recent changes in GST rates for bricks, effective April 1, 2022, have introduced notable adjustments in the tax landscape for the brick industry. Here’s a summary of the key impacts:
Increased Rate of GST on Bricks
The GST rate for bricks has increased to 12% with Input Tax Credit (ITC) and 6% without ITC. This is a significant rise from the previous 5% rate with ITC, reflecting a higher tax burden on brick suppliers.
Changes in Composition Scheme
Previously, suppliers with an annual turnover of up to Rs. 1.5 crores could opt for the composition scheme, which provided lower GST rates of 1% without ITC and 5% with ITC. As of the latest notifications, this option has been removed. Suppliers can now only opt for a special composition scheme paying 6% GST without ITC, as per Notification No. 02/2022-Central Tax.
ITC Availability
Suppliers can now choose between a 12% GST rate with ITC or a 6% GST rate without ITC. If opting for the 6% rate, they will not be able to claim ITC on inputs, which may affect cost management and pricing strategies.
Registration Threshold Changes
The registration threshold limit for brick suppliers has been reduced from Rs. 40 lakhs to Rs. 20 lakhs. This means that suppliers with an annual turnover exceeding Rs. 20 lakhs must register as regular taxpayers under GST, increasing their compliance requirements.
Impact on Compliance and Costs
The revised GST rates and changes in the composition scheme have implications for compliance costs and operational strategies. Suppliers must adapt to the new tax structure and manage their tax liabilities more carefully, potentially leading to higher costs for end consumers.
Market and Operational Adjustments
The increase in GST rates and the removal of the composition scheme may lead to adjustments in market dynamics and operational practices within the brick industry. Suppliers may need to reconsider their pricing strategies and operational efficiencies in response to these changes.
Frequently Asked Questions
1. What are the benefits for taxpayers opting to Pay Tax at 6%?
Taxpayers opting to pay tax at 6% under the Composition Scheme benefit from simplified compliance, lower tax liability, and reduced paperwork.
2. What is the HSN code of Fly Ash Bricks?
The HSN code for fly ash bricks is 6815.
3. What is the GST rate for paving bricks?
The GST rate for paving bricks is 12%.
4. What are the HSN codes of refractory and building bricks?
The HSN code for refractory bricks is 6902, and for building bricks, it is 6810.
5. What is the rate of GST on fly ash bricks?
The GST rate on fly ash bricks is 5%.
6. What are the HSN codes of sand lime bricks?
The HSN code for sand lime bricks is 6901.
7. What are the GST Rates for Those Not in the Composition Scheme?
For those not in the Composition Scheme, the GST rates vary based on the type of brick, with rates such as 12% for building bricks and 5% for fly ash bricks.
8. Who Can Opt for the Composition Scheme as a Registered Individual?
Registered individuals with an annual turnover of up to Rs. 1.5 crore can opt for the Composition Scheme.
9. If a Supplier Chooses to Supply Goods at 12%, Do They Need to Reverse the ITC on Stock Bought Before 1st April 2022?
Yes, if the supplier chooses to supply goods at 12%, they need to reverse the ITC on stock purchased before 1st April 2022.
10. Are there any special schemes under GST for small brick manufacturers?
Yes, small brick manufacturers can benefit from the Composition Scheme, which simplifies tax compliance and reduces the tax burden.
