GST Council Slashes Cement Tax to 18%, Cuts Rates on Key Construction Materials Breakthrough

The GST Council in India has reduced the tax on cement from 28% to 18%, aiming to ease construction costs for residential and commercial projects. The cuts will also lower taxes on uncut granite, marble, and travertine blocks from 12% to 5%, sand lime bricks, and stone inlay work from 12% to 5%. Portland cement, aluminous cement, slag cement, super sulphate cement, and other hydraulic cements saw their GST rate cut from 28% to 18%. The decision is expected to reduce project costs and provide relief to developers and homebuyers, though the benefits may take time to reflect due to ongoing contractual commitments. Rural housing will be a key beneficiary.

With cement accounting for nearly 10-12% of total construction costs in rural housing The price benefit of Rs 26-28/bag will be transferred to retail customers without materially affecting cement manufacturers’ profitability. The timing of the move is strategic, aligning with the seasonal surge in construction activity across rural and semi-urban regions. The GST Council’s decision is seen as a progressive move towards Viksit Bharat, promoting cleaner technology and positioning Bharat as a global leader in the energy transition The GST Council has reduced the tax on construction materials like cement and steel from 28% to 18%, a significant move for India’s infrastructure sectors.

This change will cut the material tax burden by 10% and save nearly ₹10 lakh on every ₹1 crore spent This will make projects more viable, accelerate execution, and boost participation in Public-Private Partnerships. The real estate sector, particularly affordable housing, will benefit as developers pass on cost efficiencies to consumers. Reduced tax pressure will limit the incentive for informal procurement, strengthening transparency and compliance. Faster refund decisions will benefit the industry due to improved cash flow and lower interest liability. Simplified tax structures will enable better tracking of investments and reduce reliance on informal procurement channels, enhancing transparency across the sector.

GST rationalisation on cement steel

The recent GST reforms in India have been praised by various These reforms are seen as a positive step towards infrastructure growth and easing cost pressures in the high-input industry. They are expected to lower overall project costs, enable developers to offer more competitive pricing to homebuyers, and bring greater transparency and streamline compliance The rationalisation on cement, steel, and other core construction materials is a welcome step for the real estate sector, signaling the government’s commitment to supporting infrastructure growth and easing cost pressures in a high-input industry. The move towards a simplified two-slab structure will also streamline compliance, making processes smoother and faster.

The reduction in GST on commercial vehicles, such as buses and trucks, from 28% to 18% will not only reduce logistics costs but also encourage customers to upgrade their fleets with modern, fuel-efficient, and safer trucks and buses. This will strengthen public mobility and stimulate (GatiShakti) demand in logistics and freight, critical for India’s growth momentum The recent GST slab rationalization is expected to strengthen the real estate sector by reshaping demand-supply dynamics. Lower GST on construction materials is expected to enhance housing affordability by reducing input costs, while reduced GST on other goods could improve disposable income, stimulating real estate demand.

encourage home purchases aligning

However, the overall impact may remain limited if these savings are not adequately passed on to end-consumers. The restructured GST slabs will not only boost affordability but also steer the market toward a more balanced and inclusive growth trajectory. The Indian government has announced a significant reduction in the GST on cement from 28% to 18%, a move that could lower construction costs by 2–3%. This move is expected to boost market sentiment and encourage home purchases, aligning with the government’s ‘Housing for All’ vision. The reduced GST on cement will ease input costs, enhance project viability, and enable developers to deliver greater value to end-users.

The reform will also have a positive impact on the Indian residential, retail, and office real estate sectors Residential real estate will see lower construction costs by up to 3-5%, benefiting developers, especially those creating affordable housing. The simplified GST structure will provide clarity on pricing and tax implications, potentially attracting more first-time buyers and fence-sitters to the market. Commercial real estate will also see a reduction in Input Tax Credit (ITC) on project-related costs, potentially increasing operational costs and rental prices.

GST Council’s decision to implement

Retail real estate will see better project viability and supply chain benefits, with reduced GST on building materials resulting in lower input costs for developers and faster supply of retail real estate projects. The GST rationalization will bring down logistics costs and streamline supply chains, benefiting retail real estate operations These reforms are expected to attract more institutional investment into the Indian real estate sector and boost housing supply across the country. The GST Council’s decision to implement next-generation GST reforms is a significant step towards simplifying India’s tax structure and boosting economic growth. Real estate, particularly real estate, will benefit from reduced taxes.

On raw materials like cement and marble blocks, lowering construction costs, ensuring easier compliance for developers, and improving affordability for homebuyers. The reduction of GST rates on cement, marble, and other key inputs will significantly reduce construction costs in both real estate and infrastructure, easing the burden on developers and stimulating demand. Real estate, being one of the most labour-intensive sectors, is expected to gain significantly from the reduction of GST rates from 28% to 18% on key construction materials such as cement, tiles, and other inputs. This move will help lower overall construction costs to some extent and reduce property prices, which have risen sharply over the past few years.

The reduction of GST on construction materials will transform India’s homebuilding sector, transitioning key inputs such as cement, sand, bricks, ceramics, and sanitary ware to 18% (from 28%) from 22 September 2025 onwards. This will accelerate urban infrastructure deployments, ramp up the supply of affordably priced homes, and support government initiatives on housing for all and strengthen the construction ecosystem on the whole. The GST Council’s recent decision to reduce the tax rate on cement from 28% to 18% is a significant reform that will benefit both home buyers and builders and construction companies. The lower tax on cement will reduce construction costs, increase supply, and revive demand.

Offering buyers more affordable housing options. The reform aligns with the government’s push for housing and infrastructure development and simplifies the tax structure through a streamlined two-slab GST system. The reduced GST on construction materials will transform India’s real estate sector, reducing key inputs like cement, sand, bricks, ceramics, and toilet ware from 28% to 18%. This will boost urban infrastructure deployments and supply of affordably priced houses. Developers will be able to transfer these benefits to homebuyers, making properties more affordable and driving demand The Next-Generation GST Reforms aim to create a more inclusive and business-friendly India, balancing economic prudence with social responsibility.

GST on construction materials will transform India’s

These reforms will enable long-term investments in housing, health, and education, and foster innovation and customer-centricity The proposed GST reforms are timely to increase demand and investment in India’s growing infrastructure sector, supporting the vision of enabling smarter, more efficient construction through digital transformation. The Next-Generation GST reforms in India aim to create an inclusive, efficiency-driven real estate ecosystem. The rationalisation of GST to two slabs 5% and 18% effective from September 22 reduces costs, particularly on core materials like cement, resulting in savings of nearly ₹30 per bag.

This reduction will lower construction costs, encourage new investments, and catalyze job creation in emerging real estate hubs like Kundli. The reforms also strengthen India’s urban fabric by enabling sustainable, integrated townships and bolstering Tier 2 and Tier 3 markets in (GST) alignment with Viksit Bharat 2047. The reforms promote climate-conscious development, boost affordable and commercial housing in Delhi-NCR, and support the evolution of self-sustained communities across India. The GST reforms in India aim to simplify taxation and increase transparency.

enhancing project efficiencies

The reduction in GST on cement from 28% to 18% and marble and granite from 12% to 5% will reduce construction costs by nearly 5%, enhancing project efficiencies This will elevate the standards of luxury living in India, allowing for sustainable materials and high-quality residences. The reforms represent long-term value for discerning homebuyers and investors, as the luxury housing demand in India has grown over 40% in the last two years. Lower rates on consumer-facing categories are expected to boost consumption and create a favourable environment for sustained economic activity. This, coupled with the ongoing infrastructure push, is expected to catalyze private sector capex, adding depth to the investment cycle.

The housing market, particularly affordable and mid-income segments, is expected to benefit from rationalisation, which simplifies tax structures, enhances transparency, and aligns with positive buyer sentiment. This development is expected to encourage renewed demand and make homeownership more accessible, particularly during the festive season.