The introduction of the Goods and Services Tax (GST) in India has occurred with some significant challenges for the cement sector. The decision of the GST Council to charge a substantial 28% tax rate on cement placed an extra financial responsibility on an industry already struggling with multiple levies and escalating expenses caused by urbanisation and the expanded infrastructure market. Major players like Ultratech, JK Cement, and Shree Cement experienced substantial unfavourable results this elevated tax rate.
The 28% GST Tax on the cement industry has made it difficult for corporations to increase, reduce their earnings, and pulled corresponding sectors, like the production of tangible additives.
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What Were Industry Concerns Before the 56th Council Meeting Update?
V Lakshmikumaran, Managing Partner at Lakshmikumaran and Sridharan, noted that:
India has become the second-largest cement producer in the world, and has the potential to export in the next decade.
Yet, raw materials like coal carried extra costs and limestone, stateliness to state management and a pure energy cess on coal, which was above the GST input tax credit (ITC) regime.
Electricity, which is another important input, was also excluded from GST, resulting in higher production expenses.
If the transport service tax is not creditable at the agent level, it becomes part of the general production cost.
He cautioned that unless the GST on cement is reduced to 12%, it would negatively affect infrastructure development.
Latest Updates of the GST Council Meeting for the Cement Industry
The 56th GST Council Meeting in 3rd and 4th September 2025, reported a reduction in the GST rate on cement from 28% to 18%, which is effective from September 22, 2025.
Major Key Changes
The prices of cement are expected to drop by INR 25–30 per 50kg bag, making construction more reasonable.
Lowering input prices will lower project costs, helping the infrastructure and real estate sectors.
Cement manufacturers enjoyed the decision, characterising it as a “modification of a long-standing problem.”
The GST reduction is considered a catalyst for infrastructure growth and enhancing housing affordability with India’s long-term urbanisation purposes.
