Government reduces GST on cement to 18% from 28%—a pivotal decision announced by the GST Council that will reshape India’s construction and real estate sectors.
What’s the Change?
- The GST Council has lowered the tax rate on all types of cement—from the steep 28% slab down to 18%—as part of the sweeping GST reform initiative.
- This move coincides with the simplification of India’s GST structure to two main rates—5% and 18%—with a special 40% slab reserved for sin and luxury goods
Why It Matters
1. Expect Construction Cost Reduction
- Analysts estimate construction costs could decline by 3–5%, potentially lowering cement prices by ₹25–30 per 50 kg bag.
- Developers, especially in affordable housing, may pass on savings to consumers, improving margins and project viability.
2. Boost for Real Estate & Infrastructure
- Industry bodies and developers, including CREDAI and Anarock, anticipate this cut will spur demand and accelerate project execution.
- The reduced tax burden is expected to revive affordable housing and improve overall infrastructure delivery.
3. Market Cheers Cement Stocks
- Shares of major cement companies—UltraTech Cement, Ambuja Cements, ACC, Shree Cement—rose significantly (up to 4%) following the announcement.
- Brokerages view the cut as a competitive boost and long-term support for margins.
4. Broader GST Rationalization
- Cement joined a growing list of everyday essentials—like appliances, cars, and household goods—that now attract lower tax rates, fostering demand ahead of the festive season.Reuters
Fast Facts Table
| Impact Area | Details |
|---|---|
| GST Rate Change | Cement GST reduced from 28% to 18% |
| Effective Date | From September 22, 2025 |
| Cost Impact | Prices may drop ₹25–30 per bag; construction costs may fall 3–5% |
| Housing Benefits | Boosts affordable housing affordability, project viability, and consumer demand |
| Market Reaction | Cement stocks surged up to 4% |
| Economic Outlook | Stimulates infrastructure growth, real estate sector, and festive spending |
Headhomes & Conclusions
The government’s decision to reduce GST on cement to 18% from 28% is a strategic reform with multifaceted benefits. It brings much-needed relief to construction and real estate sectors, enhances housing affordability, and sets a positive tone for the economy ahead of the festive period.
