India’s Goods and Services Tax (GST) Council, the federal body that decides indirect tax rates, has cut the levy on cement from 28 per cent to 18 per cent under the new GST 2.0 framework. The change, effective 22 September, is intended to simplify the system and reduce construction costs, but it leaves manufacturers balancing price cuts with margin protection.
The council’s overhaul replaces the 12 per cent and 18 per cent slabs with a two-tier structure, while retaining a 40 per cent rate for so-called “sin goods.” For the cement sector—long taxed at one of the highest rates among core building materials—the reduction is seen as a relief. “This step corrects a long-standing anomaly and enhances competitiveness with global peers,” said Neeraj Akhoury, managing director of Shree Cement and president of the Cement Manufacturers’ Association.
Executives say lower tax could improve affordability of housing and premium cement brands, while ratings agency Crisil forecasts demand growth of 6.5–7.5 per cent in FY25-26. Still, analysts caution that cement accounts for only 4–5 per cent of total construction costs, limiting the demand boost.
Under India’s anti-profiteering rules, companies must pass benefits on to consumers, and with the Competition Commission of India already scrutinising the sector, pricing practices will remain under close watch.
