This detailed note explains the evolution of GST rates applicable to construction services under the Central Goods and Services Tax (CGST) framework, particularly for works contracts related to infrastructure projects like sewerage treatment plants (STPs), common effluent treatment plants (CETPs), water supply, and crematoria. It traces the rate changes from 18% (under Notification No. 11/2017) to reduced rates of 12% and 6% (under Notifications No. 20/2017, 31/2017, and others) based on the nature of services and the status of the recipient (e.g., Government, Government Authority, Government Entity). The note highlights key amendments through to Notification No. 03/2022-Central Tax (Rate), where concessional rates were withdrawn, and the GST rate was revised to 18% across the board, including for projects under the Jal Jeevan Mission, effective from July 18, 2022.

1. As per Notification No.11/2017-Central Tax (Rate) dated 28th June, 2017 [Heading 9954 (Construction services)], the above mentioned construction services came under the category "Composite supply of works contracts as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017" [SI No. 3, Chapter 99, Section 5, Heading 9954 (Construction services), Sub-clause (ii)], for which the applicable CGST rate was 9%. Consequently, the aforesaid categories of construction services attracted a GST of 18%.
2. Notification No. 20/2017-Central Tax (Rate) dated 22nd August, 2017, inter alia, introduced the following changes:
(a) A CGST rate of 6% in respect of "pipeline, conduit or plant for (i) water supply, (ii) water treatment, or (iii) sewerage treatment or disposal" for the composite supply of works contracts as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017 to "the Government, a local authority or a Goverment
Authority".
(b) A CGST rate of 6% in respect of " (e) a pollution control or effluent treatment plant, except located as a part of a factory, or (f) a structure meant for funeral, burial or cremation of deceased......." for composite supply of works contracts as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. An important point to note is that while the CGST rate for services mentioned in Para 4(a) is applicable only for supplies to "the Government, a local authority or a Government Authority", the CGST rate in Para 4(b) is applicable irrespective of the recipient of the services.
3. The CGST rate mentioned in Para 4(a) was extended to supplies to "Government Entity' also vide Notification No. 31/2017-Central Tax (Rate) dated 13th October 2017. In addition, the scope of "Government" mentioned in the Notification dated 22nd August 2017 was elaborated as "Central Government, State Government, Union Territory".
4. The effect of the amendments dated 22.08.2017 and 13.10.2017 is summed up below:-
A GST rate of 12% became applicable to construction services in respect of STPs, including the related pipeline, conduit etc, effective either 22.08.2017 or 13.10.2017, depending on whether the services are supplied to "Government authority" or "Government entity".
A GST rate of 12% became applicable to construction services in respect of Common Effluent Treatment Plants (except located as part of a factory) and construction of crematoria from 22.08.2017 (irrespective of the recipient of the service).
Vide Notification No. 22/2021- Central Tax (Rate) dated 31st December 2021 (effective from 1st January 2022), the applicability of 6% CGST in respect of "pipeline, conduit or plant for (i) water supply, (ii) water treatment, or (iii) sewerage treatment or disposal" for composite supply of works contracts as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017" was restricted to "Central Government, State Government, Union Territory or a local authority" ("Government Authority" and "Government Entity" were deleted). However, no change was made regarding the CGST rate applicable to the construction of CETP and the construction of crematoria. These changes were initially notified vide Notification No. 15/2021 - Central Tax (Rate) dated 18th November, 2021 (effective from the 1st January, 2022), but the said notification was superseded by the notification no, 22/2021- Central Tax (Rate) dated 31st December 2021.
5. Following the notification dated 31st December 2021 (effective from 1st January 2022), the 12% GST rate was retained only for construction services supplied to "Central Government, State Government, Union Territory or a local authority" in respect of STPs, including the pipeline, conduit etc. If the executing agency for STP projects is not a "State Government or a local authority", the GST rate on construction services supplied to them in respect of "pipeline, conduit or plant for sewerage treatment or disposal" would no longer be 12% and stand revised to 18% with effect from 01.01.2022. But if the status of executing agency was that of a "State Government or a local authority", 12% GST rate would still remain applicable. The GST rate applicable to the Jal Jeevan mission continued to be 12% , irrespective of the status of the executing agency.
6. Vide Notification No. 03/2022-Central Tax (Rate) dated 13th July 2022 (effective from 18th July 2022), the provisions related to 6% CGST rate in respect of STPs (for supplies to "Central Government, State Government, Union Territory or a local authority") and in respect of CETPs and crematoria (irrespective of the authority to which supplied) were deleted. As a result, 18% GST rate became applicable to the construction of STPs (irrespective of the status of executing agency), Jal jeevan mission also w.e.f. 18.07.2022.