GST on Cement: Tax Rate & Applicability

Cement attracts 18% GST under HSN code 2523 with effect from 22 September 2025, and this GST for cement directly affects pricing, procurement costs and input tax planning across the construction supply chain. The rate applies to major cement variants, including ordinary Portland cement (OPC), Portland pozzolana cement (PPC), aluminous cement, slag cement and similar hydraulic cements.

The rate was reduced from 28% to 18% by the Central Board of Indirect Taxes and Customs (CBIC) through Notification No. 09/2025-Central Tax (Rate) dated 17 September 2025. For contractors, manufacturers and traders, this lowers the Goods and Services Tax (GST) burden on one of the most significant input costs in construction and related business activities.

What is the current GST rate on cement?

The current GST rate on cement is 18%, effective from 22 September 2025. The table below shows the GST rate and HSN classification for major cement categories: 

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

The GST rate on cement inputs affects the effective cost structure for manufacturers. The table below shows the GST rates on key raw materials used in cement production:

What are the criteria to claim ITC under GST? 

A registered business can claim input tax credit (ITC) on the 18% GST paid on cement purchases, subject to the conditions under Section 16 of the CGST Act. However, Section 17(5) of the CGST Act blocks ITC in certain construction-related situations.

The key distinction is whether cement is used to make taxable outward supplies or to construct immovable property on the taxpayer's own account.

When is ITC on cement available?

ITC on cement is available in the following situations:

• A contractor providing work contract services to a client can claim ITC on cement and other materials used in that project because the output is a taxable supply.
• A cement dealer or distributor can claim ITC on purchases because cement is used for further taxable outward supplies.
• A manufacturer using cement in the production of taxable goods, such as precast concrete components for sale, can claim ITC.

When is ITC on cement blocked?

Under Section 17(5)(c) and Section 17(5)(d) of the CGST Act, ITC is blocked on goods and services, including cement, used for constructing an immovable property on the taxpayer's own account, even when the construction is in the course of business.

Examples of blocked ITC include:

• A company constructing its own factory, warehouse or office cannot claim ITC on cement, steel or architectural services used in that construction.
• A hospitality business building a hotel on its own account cannot claim ITC on cement used in construction, even if the hotel generates taxable rental income.
• An individual building a residential house for personal use cannot claim ITC on construction inputs.

Is there an exception?

Yes. ITC is available on goods or services used for the construction of plant and machinery, which is treated separately from immovable property under the law.

Conclusion

The lower GST rate on cement improves cost efficiency, but the actual tax impact depends on whether input tax credit is available. For businesses in construction, trading and manufacturing, the more important consideration is not just the GST rate but how cement is used under the ITC provisions of the CGST Act.

Because ITC eligibility can change based on end use, accurate classification, credit tracking and compliance records remain essential. Tools like TallyPrime can help businesses manage GST calculations, monitor input credits and maintain stronger compliance control across daily operations.