India cuts cement GST to 18% in construction cost boost

A tax cut from 22 September lowers GST on cement from 28% to 18%, while several other building materials move to 5%, potentially reducing construction costs by up to 5%.

India’s overhaul of goods and services tax has given the cement industry one of its clearest wins. From 22 September 2025, the levy on cement fell from 28% to 18% after the GST Council approved the change at a meeting on 3 September 2025. That shift mattered because cement had been stuck in the top tax bracket since GST was introduced in July 2017, despite being a core input for homes, roads and bridges. Industry groups had long argued that the previous rate treated a basic construction material like a luxury item.

The reform did not stop with cement. According to industry and tax guidance published after the change, marble and granite blocks, sand-lime bricks, bamboo flooring and wooden joinery such as doors and windows all moved down to 5% from 12%, while steel remained at 18%. Cement itself was covered under the hydraulic cement category, including Portland, aluminous and slag varieties. The tax shift was designed to ease pressure across the building materials chain, particularly for individual home builders who cannot claim input tax credit, even as larger contractors benefit mainly from lower cash tied up in tax payments.

The cost impact is likely to be felt most sharply in projects where cement makes up a large share of total materials spending. Estimates cited around the time of the change suggested that overall construction costs could fall by roughly 3% to 5%, depending on the mix of materials used. For households building their own homes, that means a more immediate reduction in the tax burden. For developers and contractors, the main advantage is improved cash flow, as less working capital is locked up in upfront tax outlays.