From April 1, 2022 The GST on Some Types of Bricks Increased From 5 per cent to 12 per cent

In a major setback to kiln owners and customers, the GST on some sorts of bricks was increased from 5% to 12% on April 1 and the rules governing input tax credit (ITC) were also altered. Brick kiln operators would suffer another blow, as the exemption threshold for falling within the GST ambit has been reduced, from Rs 40 lakh to Rs 20 lakh.

The kiln owners are incensed with the Centre, claiming the modifications were implemented without prior notice, while tax experts say they were determined during the GST council meeting in September last year.

"From April 1, the GST rate on building bricks, earthen or roofing tiles, fossil meal or similar siliceous earths bricks, fly ash bricks or fly ash aggregate with 90% or more fly ash content, and fly ash blocks has been increased from 5% to 12% with ITC on inputs (primarily GST paid on coal), input services (primarily GST paid on freight), and capital goods," one tax expert explained. 

The brick makers have the option of paying GST at the 6% rate under the special composition system, but they would be unable to claim the ITC in that event. All brick makers with a revenue of more than Rs 20 lakh must register and pay the applicable GST rates. Previously, the ceiling was set at Rs 40 lakh."

Apparently these adjustments were communicated during the 45th GST council meeting in September 2021. These will very probably raise brick prices and have a negative impact on those considering development. The construction sector, as a whole, will experience rising expenses. ITC is not approved for residential building development, therefore this surge in brick costs would undoubtedly raise the cost of housing projects.

A certain brick kiln owner and member of the Ludhiana Brick Kiln Association, criticised the move.

How the above move impacts the construction and Indian real estate industry overall is definitely waited to be seen.