Government Slashes GST On Cement To 18%: Homebuyers & Builders Eye Lower Costs

In a significant policy shift, the government has reduced the Goods and Services Tax (GST) on cement from 28% to 18% following the 56th GST Council meeting.

Effective from September 22, 2025, the revised rate applies to all major categories, including Portland, aluminous, slag, super sulphate and other hydraulic cements.

Industry experts believe the move could lower the cost of building or buying homes, provided cement manufacturers pass on the benefit to consumers. Cement currently accounts for 10–12% of total construction costs, especially in rural housing.

Anupama Reddy, Vice President & Co-Group Head, ICRA Ltd, explains that the tax cut equates to a 0.8%–1% reduction in overall construction expenses, translating to savings of ₹26–28 per cement bag.

“Rural housing will be a key beneficiary,” she notes, adding that the price benefit could be passed directly to retail customers without hurting cement manufacturers’ profitability.

Nakul Bajaj, Managing Director of MNB Buildfab, expects the GST rationalisation to reduce overall project costs by 5–7%, particularly benefiting affordable and mid-income housing segments.

How Developers & Homeowners Benefit

With cement now taxed at 18%, the post-tax price per bag drops, lowering total construction costs for builders.

This could result in reduced per-square-foot prices for houses or more attractive pre-launch offers for consumers. Individual homeowners building under-construction properties may also see immediate benefits through cheaper raw materials.

CA Siddharth Surana highlights that while most developers opt for the 5% GST scheme without Input Tax Credit, cement remains a key cost driver.

“This rate cut directly translates into lower project costs and improved cash flows, offering a strong boost to housing affordability,” he says.

Industry observers say the move could revive affordable housing, which has seen its share of total sales fall from 38% in 2019 to 18% in 2024.

ANAROCK research suggests that reduced construction costs, if passed on to buyers, may stimulate demand in a segment with an urban shortfall of nearly one crore budget homes.

Vimal Nadar of Colliers India notes that while the impact on home prices may take time to reflect, ‘this decision can bring much-needed relief amid rising property prices and enhance overall affordability’.

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