The Indian government implemented a major overhaul of the Goods and Services Tax (GST) today, replacing the intricate system with a streamlined two-slab structure of 5 percent and 18 percent. It is a distinguishing move that will be a strategic driver and a notable landmark push for the sector. The reduction in cement's GST from 28 to 18 percent proved to be one of the most significant developments of this sector. This action will firmly reduce construction costs and housing costs and will further foster the expansion of the infrastructure and real estate sectors.
In the wake of the recent GST reduction on building materials, cement is an essential component of construction, contributing between 15–20 percent of a building's overall expense. In fact, it appears that the GST drop is going to reduce overall construction costs by 2-4 percent, and it might even result in benefits of ₹75,000 to ₹2.5 lakh on projects costing between ₹25 lakh and ₹50 lakh. In this sense, the major cement manufacturers, such as Vicat India (Bharathi Cement and Kalburgi Cement), JK Cement, and UltraTech Cement, have committed to passing on the full benefit of the GST reduction to consumers. These companies have changed their pricing and invoicing processes to explicitly state the new 18 percent GST rate.
The GST reduction will offer substantial financial relief for individual homebuilders and developers. For example, a 1,500 sq ft home could see an enormous reduction of ₹10,000 to ₹12,000 in cement costs alone. The amount can exceed up to ₹40,000, along with the discounts on other supplies such as paints and tiles in the mid-sized project. Ultimately, the Pradhan Mantri Awas Yojana (PMAY) can now even offer more reasonable houses for the people, who will greatly benefit from this reduction. Apparently, the cost reductions will stimulate the viability of the sector and extend it to a new market boom.
The government has highlighted the importance of transparency in passing on GST benefits to consumers directly. On the other hand, Consumer Affairs Secretary Nidhi Khare cautioned that companies failing to reflect the revised GST rates would be penalized and subjected to severe penalties.
Homebuyers and builders should make sure that they receive a comprehensive invoice that fully reveals the GST rate charged, as well as the savings realized. It is more important to be vigilant to ensure that the GST savings being produced are realized.
Dharmender Tuteja, Chief Financial Officer, Dalmia Bharat, called the move “a very positive step, both for consumers and industry. It will set in motion a virtuous cycle of creating higher purchasing power and spurring cement demand.”
Indrajit Mookerjee, Vice Chairman & Executive Director, Texmaco Rail & Engineering, said, “By collapsing multiple slabs into a simplified 5 per cent and 18 per cent structure, the government has reduced ambiguity and ensured smoother compliance. This will be particularly beneficial for long-gestation projects such as railways, where predictability and cost efficiency are key to planning and execution.”
Mohit Goel, Managing Director, Omaxe, argued, “By reducing rates on key inputs like cement, granite and marble, the government has eased cost pressures in construction and simplified compliance, improving affordability for homebuyers, especially in the under-construction segment."
Amrita Gupta, Director, Manglam Group, said, “The festive quarter has always been a natural catalyst for homebuying and this year the backdrop is even stronger. The GST Council’s recent cuts, from 12% to 5% on marble and granite blocks and 28% to 18% on key cements, signal softer input costs and help ease pressure on future pricing."
Anoop Kumar Saxena, CEO, Vicat In India Operations, said, “The reduction of GST on cement from 28% to 18% is a bold step that lays the foundation for a stronger and more self-reliant India. At Bharathi Cement and Kalburgi Cement, we remain fully committed to supporting this movement by ensuring a reliable supply of superior quality products in the market. From 22nd September, we will be passing on the complete benefit of this GST reduction to our customers across both our brands – Bharathi Cement in the South and Vicat Cement in Maharashtra.”
Manish Sharma, Chief Operating Officer, Vicat In India Operations, added, “Our invoices will reflect the GST change from 28% to 18% for cement sales across India. We have already advised all our dealers and channel partners to reduce cement prices accordingly and ensure that the full benefit is passed on to customers. This reform will not only help home builders but also contribute to India’s journey of becoming the world’s third-largest economy.”
The Cement Manufacturers Association (CMA), said, “For a long time, cement has been taxed at one of the highest rates among essential building materials compared to steel and other inputs. Lowering the rate to 18 per cent corrects this anomaly and ensures parity with other core materials.”
Today's reduction in the GST on cement from 28 to 18 percent is a huge step that showing promises to lower construction costs, making housing more affordable and stimulating growth in the real estate and infrastructure sectors. This structure aligned with major cement manufacturers committing to pass on the full benefits to consumers, and will have a positive effect on this policy change. In this context, the sector can now overcome the bottlenecks that have predominantly stagnated it for a long time, and it is expected to be widespread and significant. Notably, when the construction industry adapts to the new tax structure, ongoing monitoring and consumer awareness will be very crucial to ensure that the intended benefits are fully realized.
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