New GST on Cement in India: Tax Rate and Its Impact on Construction Costs
Quick Summary
- The GST rate on cement in India was reduced from 28% to 18% effective September 22, 2025.
Cement, including types like OPC and PPC, falls under HSN code 2523 and is now taxed at 18%. - The high GST rate on cement increases construction costs, impacting projects like affordable housing and infrastructure.
- Businesses can claim Input Tax Credit (ITC) on cement used for business purposes but not for personal construction projects.
- Before GST, cement was taxed under multiple heads with a total effective tax rate of 25–27%, now replaced by a flat GST rate.
Cement is a key ingredient in construction, whether you’re building a home, a commercial complex, or infrastructure. With the implementation of the Goods and Services Tax (GST), the tax structure for cement has been streamlined, but it remains one of the highest-taxed items. In this blog, we’ll break down the cement gst rate, relevant HSN codes, how it affects pricing, and what it means for real estate and infrastructure projects.
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New GST Rate on Cement in India
The GST rate on cement was revised from 22 Sep 2025. Under the revised structure, cement and clinker under HSN 2523 attract 18% GST, replacing the earlier 28% rate. This applies across the main cement categories covered under heading 2523, including Portland cement, white cement, and clinker.
GST Rate on Cement and Clinker
| Type of Cement | New GST Rate (After 22 Sep 2025) |
Old GST Rate (Before 22 Sep 2025) |
Remarks |
|---|---|---|---|
| OPC | 18% | 28% | Standard slab after revision |
| PPC | 18% | 28% | Standard slab after revision |
| White Cement | 18% | 28% | Covered under HSN 2523 |
| Cement Clinker | 18% | 28% | Same heading family under 2523 |
| Hydraulic Cement other than Portland | 18% | 28% | Covered under HSN 2523 |
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 28%
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 28%
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 28%
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 28%
(After 22 Sep 2025) 18%
(Before 22 Sep 2025) 28%
HSN Code for Cement
Cement and cement clinker are covered under HSN 2523, which includes Portland cement, aluminous cement, slag cement, super sulphate cement and similar hydraulic cements, whether or not coloured or in the form of clinkers.
| Product Description | HSN Code |
|---|---|
| Portland Cement, including white cement | 2523 |
| Cement Clinker | 2523 |
| Hydraulic Cement | 2523 |
GST Impact on Real Estate and Infrastructure
Earlier, 28% GST on cement increased construction costs for builders, contractors, and infrastructure projects. With the rate cut to 18%, cement becomes a less tax heavy input, which can reduce pressure on project budgets, contractor pricing, and overall construction costs.
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How to Calculate GST on Cement
GST on cement is calculated on the taxable value of the goods at the applicable GST rate.
GST Amount = Taxable Value × GST Rate
Final Invoice Value = Taxable Value + GST Amount
Example 1: Cement bag purchase after 22 Sep 2025
Suppose the taxable value of cement is Rs 10,000.
GST = 10,000 × 18% = Rs 1,800
Final Invoice Value = 10,000 + 1,800 = Rs 11,800
Example 2: Cement clinker purchase after 22 Sep 2025
Suppose the taxable value of clinker is Rs 50,000.
GST = 50,000 × 18% = Rs 9,000
Final Invoice Value = 50,000 + 9,000 = Rs 59,000
Input Tax Credit (ITC) on Cement
Businesses registered under GST can claim ITC on the GST paid on cement if:
- The cement is used for business purposes (e.g., construction of a factory)
- A proper tax invoice is available
- The supplier has filed returns
However, ITC is restricted if the cement is used for constructing an immovable property (e.g., a building for self-use), as per Section 17(5) of the CGST Act .
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Unique Features of BUSY Accounting Software for the Cement Industry
- Batch-wise inventory management for different grades of cement.
- Real-time Shelf-life tracking across multiple godowns and depots.
- Customisable rate lists for wholesale, retail, and project-based pricing.
- Vehicle and transportation tracking integrated with sales invoices.
- Multi-unit stock handling (bags, tons, kgs) with unit conversion.
- Automated challan and invoice generation for bulk orders .
- Approval workflow for dispatch orders and pricing overrides.
- Loading and unloading expense tracking at each transaction level.
- Centralised reporting for stock movement and sales analysis.
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Final Thoughts
Cement continues to be one of the highest-taxed items under GST, which adds significantly to construction and infrastructure costs. For real estate developers, understanding how GST and ITC apply to cement can help manage project finances. For individual buyers or small contractors, it’s important to factor in GST while planning budgets.
