Impact of GST 2.0 on the Cement Industry
The cut in GST on cement from 28% to 18% is a significant step. As cement makes up around 15–20% of overall construction expenses, this 10% reduction directly brings down the cost of building homes and infrastructure. The move is expected to give a boost to the affordable housing sector, which previously faced pressure from high input costs. Although the higher rate has been removed, businesses continue to use GSTR-3B for regular filings to claim eligible Input Tax Credits (ITC).
GST Calculation on Cement (New Rates)
Item
|
Old Calculation (28%)
|
New Calculation (18%)
|
Cement Base Price
|
Rs. 5,000
|
Rs. 5,000
|
GST Amount
|
Rs. 1,400
|
Rs. 900
|
Total Cost
|
Rs. 6,400
|
Rs. 5,900
|
GST trends and the real estate industry
The move to a simplified two-slab GST structure of 5% and 18% has reduced much of the complexity in real estate accounting. By lowering GST on key materials such as paints, tiles, and cement to 18%, the government has encouraged developers to pass on cost savings to homebuyers. At the same time, the 5% GST rate on under-construction residential properties, without input tax credit, continues to apply to non-affordable housing to help keep the final price stable for buyers.
What is the GST rate on sand?
The GST rate on sand in India is set at 5%. This relatively low rate aims to keep the costs of basic construction materials affordable, especially for small-scale and rural construction projects. The tax applies to both natural sand and manufactured sand, ensuring uniformity across different types of the material. This rate is crucial for the construction sector as sand is a fundamental component in concrete and other building materials. Keeping the GST on sand low helps manage overall construction costs and supports infrastructure development. If you're registering for GST, you will need to provide the gst registration documents as part of the process.
What is the GST rate on Bricks and Tiles?
As per the new notification effective 22nd September 2025, GST on common construction materials has been reduced to support the "Housing for All" initiative:
- Building Bricks (Clay, Fly Ash): 5% (down from 12%)
- Roofing/Earthen Tiles: 5% (down from 12%)
- Cement/Concrete Blocks: 12% (previously 18%)
Conclusion
The updated GST rates on construction materials significantly ease cost pressures for both builders and homebuyers. Reduced taxes on cement, bricks, and tiles make housing more affordable, simplify compliance, and promote growth in the real estate sector. With clearer slabs and predictable input costs, developers can plan projects more efficiently while supporting the government’s long-term housing and infrastructure goals.
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Helpful resources and tips for business loan borrowers
