New GST on Cement in India: Tax Rate and Its Impact on Construction Costs
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 GST rate on cement, relevant HSN codes, how it affects pricing, and what it means for real estate and infrastructure projects.
What is the GST Rate on Cement?
Cement attracts a GST rate of 28%, which is among the highest slabs under the current tax regime. This rate applies to all types of cement, including:
New GST Rate on Cement in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for cement and clinker (no compensation cess).
| Type of Cement | New GST Rate | Remarks |
|---|---|---|
| OPC, PPC, White Cement | 18% | Standard slab post-change |
| Clinker (raw material for cement) | 18% | Same as finished product |
Old GST Rate on Cement in India
(Old GST Rates – Applicable Until 21st September)
| Type of Cement | GST Rate | Remarks |
|---|---|---|
| OPC, PPC, White Cement | 28% | Highest GST slab |
| Clinker (raw material for cement) | 28% | Same as finished product |
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HSN Code for Cement
Cement and cement products fall under HSN code 2523 , which includes:
| Product Description | HSN Code | GST Rate | New GST Rate |
|---|---|---|---|
| Portland Cement (incl. white cement) | 2523 | 28% | 18% |
| Cement Clinker | 2523 | 28% | 18% |
| Hydraulic Cement (non-Portland) | 2523 | 28% | 18% |
HSN codes must be mentioned on invoices and GST returns for accurate tax classification.
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How Does GST Impact Cement Prices?
Let’s say the base price of a 50kg bag of cement is ₹350.
- GST @28% = ₹98
- Total Cost per Bag = ₹350 + ₹98 = ₹448
This significant tax burden raises construction costs, especially in bulk procurement. Since cement is used in large quantities, the total impact on a project’s budget can be substantial.
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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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GST Impact on Real Estate and Infrastructure
Cement being taxed at 28% increases the cost of construction materials. This affects:
- Affordable housing projects – Higher input costs reduce margins
- Infrastructure development – Roads, bridges, etc., become costlier
- Contractor pricing – Final project bids rise to accommodate higher tax
While developers can claim ITC, homebuyers indirectly bear the burden of higher cement prices in property costs.
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Pre-GST vs Post-GST Comparison
Before GST, cement was taxed under multiple heads:
- Excise Duty: ~12.5%
- VAT: ~12–15%
- Total effective tax: 25–27%
- Under GST, it’s a flat 28%, which simplifies taxation but does not reduce the overall tax burden.
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- 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.
I am a Fellow Chartered Accountant (FCA) and LLB graduate with 10 years of experience in corporate auditing, taxation, and financial consulting. My expertise includes corporate audits, income tax planning, HSN code classification, and GST rate advisory. Through my blogs and articles, I aim to simplify corporate taxation, auditing, and GST compliance, making financial matters more accessible for professionals and business owners.
Frequently Asked Questions
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What is the current GST rate on cement?Cement is taxed at 28% under GST.
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Can builders claim ITC on cement?Builders can claim ITC only if the cement is used for business purposes and not for construction of buildings intended for personal use.
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Why is cement taxed so high?Cement is classified as a luxury or high-revenue item, hence placed in the highest tax bracket.
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Is GST applicable on cement transportation too?Yes. Transportation services attract 5% or 18% GST, depending on the service type.
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Has the GST rate on cement changed since 2017?No. Cement has consistently remained in the 28% slab since GST was introduced.