Cement GST Percentage: Rate, HSN Code & Applicability

The GST rate on cement in India is 18% under HSN code 2523, effective from 22 September 2025. Since cement is a major input for construction, infrastructure and manufacturing projects, the applicable GST rate directly influences procurement costs, pricing strategies and ITC claims. 

Using the correct HSN classification and understanding the applicable GST and ITC rules helps businesses ensure compliance, avoid disputes and optimise tax recovery.

What is GST on cement and what is its current rate?

GST on cement is the tax levied on the manufacture, sale and supply of cement under India's Goods and Services Tax regime. The current GST rate on cement is 18%, effective from 22 September 2025, following a reduction from 28%through a notification issued by the Central Board of Indirect Taxes and Customs (CBIC).

The 18% rate applies to Portland, aluminous, slag, super sulphate and similar hydraulic cements classified under HSN code 2523, reducing the tax burden on the construction and infrastructure sectors while simplifying GST compliance for businesses.

Who needs to pay GST on cement?

GST on cement is payable by GST-registered businesses involved in its manufacture, supply or sale. This includes cement manufacturers, wholesale distributors, building material retailers, construction contractors and real estate developers, who must collect and remit GST as applicable.

For unregistered buyers, such as individual homeowners purchasing cement for personal use, GST is included in the retail price paid at the time of purchase. Since they are not registered under GST, they cannot claim ITC.

What is the GST rate for different types of cement?

Different types of cement and cement-based products attract different GST rates based on their HSN classification. Most cement products classified under Harmonised System of Nomenclature (HSN)code 2523 attract 18% GST, and refractory cements, mortars and concretes classified under HSN code 3816 also attract 18% GST.

Using the correct HSN code on a tax invoice is essential. An incorrect classification can lead to GST return mismatches, incorrect tax reporting and compliance issues during scrutiny or audits.

What is the GST rate on raw materials used in cement production?

The GST rate on raw materials used in cement production varies by the type of input and its HSN classification. These rates directly affect manufacturers' input costs and the amount of ITC that can be claimed.

When does GST apply to cement?

GST applies to cement when it is supplied within India by a GST-registered supplier in the course or furtherance of business. The tax is levied on the transaction value, which generally includes the price of the cement along with any incidental expenses that form part of the value of supply under the GST law.

The applicable tax depends on the nature of the supply. CGST and SGST apply to intra-state supplies, while IGST applies to inter-state supplies. GST also applies to cement supplied through retail sales, bulk business purchases and works contracts, wherever the transaction is taxable under the GST law.

To ensure accurate tax calculation and compliance, businesses involved in manufacturing, distribution, trading or construction should determine the correct place and nature of supply before raising the tax invoice.

How is GST calculated on cement?

GST on cement is calculated by applying the 18% GST rate to the taxable value of the purchase. The tax is charged differently depending on whether the supply is within the same state or between different states.

• Intrastate supply (within the same state): GST is split equally into Central Goods and Services Tax (CGST) at 9% and State Goods and Services Tax (SGST) at 9%.
• Interstate supply (between two states): The entire 18% is charged as Integrated Goods and Services Tax (IGST).

The GST amount is calculated using the following formula:

GST Amount = Taxable Value × GST Rate ÷ 100

The GST amount is then added to the taxable value to determine the total invoice value.

Total Invoice Value = Taxable Value + GST Amount

Example: Intrastate purchase

Suppose a business purchases OPC cement worth ₹50,000 from a supplier located in the same state.

• Taxable value: ₹50,000
• CGST (9%): ₹4,500
• SGST (9%): ₹4,500
• Total invoice value: ₹59,000

Example: Interstate purchase

If the same ₹50,000 purchase is made from a supplier located in another state:

• Taxable value: ₹50,000
• IGST (18%): ₹9,000
• Total invoice value: ₹59,000

Input tax credit on cement: What businesses must know

Businesses registered under GST can claim ITC on cement purchases only if the conditions under Section 16 of the CGST Act are satisfied. However, Section 17(5) blocks ITC in certain construction-related cases, so eligibility depends on how the cement is used.

ITC can generally be claimed when:

• Cement is purchased by a dealer or distributor for resale.
• A contractor uses cement while providing taxable works contract services to a client.
• A manufacturer uses cement to produce taxable goods, such as precast concrete products.

ITC is generally not available when:

• Cement is used to construct an immovable property on the taxpayer's own account, including offices, factories, warehouses or hotels.
• The construction is capitalised as an immovable asset, even if it is used for business purposes.

An exception may apply to cement used for the construction of plant and machinery, as these are treated differently from immovable property under the GST law.

Conclusion

Accurate GST compliance on cement requires more than applying the correct tax rate. Businesses must use the right HSN code, calculate GST correctly and claim eligible ITC while complying with GST provisions. TallyPrime simplifies these tasks with automated GST features, helping businesses reduce errors, stay compliant and remain audit-ready. Start your free trial today.