55th GST Council clarifies Autoclaved Aerated Concrete (AAC) Blocks with over 50% Fly Ash Content will attract a 12% GST Rate

The Union Finance Minister Nirmala Sitharaman chaired the 55th meeting of the GST Council today ( 21st December 2024 ) at Jaisalmer, Rajasthan. The council clarified that Autoclaved Aerated Concrete ( AAC ) blocks with over 50% fly ash content will attract a 12% GST rate.

The construction industry commonly uses Autoclaved Aerated Concrete ( AAC ) blocks, which are lightweight and eco-friendly building materials. AAC blocks that include more than 50% fly ash also have the added advantage of using industrial waste to support environmental sustainability.

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According to the current GST framework categorization, AAC blocks are typically subject to an 18% GST levy. However, a special GST rate of 5% is available for fly ash bricks, blocks, or items that include more than 90% fly ash. 50% fly ash AAC blocks that fall short of the 90% fly ash requirement to be eligible for the discounted rate. They will now be subject to 12% GST.

By encouraging the reuse of industrial byproducts like fly ash, ACC helps to lessen pollution in the environment. It will contribute to the preservation of natural resources such as soil, which is utilized in conventional bricks. This lessens structural load because it is lightweight and manageable. It has outstanding sound and heat insulation qualities. Its non-flammability and insect resistance improve durability and safety.

Although the 5% GST rate does not immediately apply to AAC blocks that include 50% fly ash, their use is consistent with green building principles and may qualify for subsidies or incentives for environmentally friendly building projects.

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The GST rates for AAC blocks with varying fly ash contents may cause suppliers and manufacturers to become confused. A consistent tariff for all products made from fly ash could make compliance easier and promote the use of sustainable materials. In order to increase the appeal of AAC blocks containing more than 50% fly ash, industry stakeholders should advocate for decreasing the fly ash threshold for concessional GST rates from 90% to 50%.

In addition to Chief Ministers from Goa, Haryana, Jammu and Kashmir, Meghalaya, and Odisha, as well as Deputy Chief Ministers from Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana, the meeting was attended by Union Minister of State for Finance Shri Pankaj Chaudhary and Revenue Secretary Ajay Seth.

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