GST on Cement Reduced from 28% to 18%, Boosting Real Estate and Affordable Housing
The GST Council's decision to cut the tax rate on cement from 28% to 18% is expected to lower construction costs and make affordable housing more accessible, say experts.
GstReal EstateAffordable HousingConstruction CostsTax ReformReal Estate MumbaiSep 04, 2025
Niranjan Hiranandani, chairman of Hiranandani and NAREDCO National, emphasized that the reduction of GST on critical construction materials like cement from 28% to 18% is a landmark reform. This will significantly ease input costs, improve project viability, and accelerate infrastructure development across the country.
“Affordable housing, in particular, stands to gain as reduced construction costs can be passed on to homebuyers, making homes more accessible while supporting the government’s Housing for All vision. This rationalisation is not just a boost for developers; it is a win-win for consumers, the housing sector, and India’s long-term growth story,” he said, adding that the GST rationalisation is a festive bonanza for Indian consumers and a strategic boost for the economy.
G Hari Babu, national president of NAREDCO, highlighted the timing of this decision as equally significant. Announced during the festive season, it will lift consumer sentiment and create fresh demand. It will act as a strong booster for the economy, support homebuyers, and encourage developers. “This is a progressive step that will create long-term momentum for India’s economy,” he said.
Deepak Kumar Jain, founder and CEO of TaxManager.in, noted that 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. This move will help lower overall construction costs to some extent.
The 56th GST council meeting decided to rationalise GST rates to two slabs of 5 per cent and 18 per cent by merging the 12 per cent and 28 per cent rates. Addressing the media after the Council meeting at the National Media Centre on September 3, Union Finance Minister Nirmala Sitharaman said, “Let me first say that the honourable PM actually set the tone for the next generation in reforms on the 15th of August when he spoke from the Red Fort. He desired that we give benefits to the people at the earliest. This reform is not just on rationalizing rates. It's also on structural reforms. It's also on ease of living, so that businesses can do their business with GST with great ease.”
She added, “We have corrected inverted duty structure problems, resolved classification-related issues, and ensured stability and predictability. We have reduced the slabs. There shall be only two slabs, and we are addressing issues of compensation, ease of living, simplifying registration, return filing, and refunds.”
Frequently Asked Questions
What is the new GST rate on cement?
The new GST rate on cement has been reduced from 28% to 18%.
How will this affect the real estate sector?
The reduction in GST on cement is expected to lower construction costs, making it more affordable for developers and buyers, thus boosting the real estate sector.
What is the impact on affordable housing?
Lower construction costs can be passed on to buyers, making homes more accessible and supporting the government’s Housing for All mission.
When was this decision made?
The decision was made by the GST Council on September 3.
What other reforms were announced in the 56th GST council meeting?
The 56th GST council meeting decided to rationalise GST rates to two slabs of 5% and 18% by merging the 12% and 28% rates. Other reforms include correcting inverted duty structure problems, resolving classification-related issues, and simplifying registration, return filing, and refunds.
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