Cement HSN Code and GST Rate in India (2026 Update)

Cement is the most essential material in construction and infrastructure projects, and its taxation directly impacts project costs. In India, knowing the cement HSN code and GST rate is essential for businesses and contractors. Cement and related products fall under the Harmonized System of Nomenclature (HSN) code 2523. This HSN classification sets the GST rate for cement at 28%. Both businesses and consumers of cement must pay this tax, ensuring correct GST rate application and valid tax invoices.

Whether you’re a contractor or a DIY enthusiast, knowing cement GST helps plan your budget. It also prevents unexpected costs, simplifies accounting, and makes purchasing smoother.

This article explains cement HSN codes and GST rates, and their impact on construction and real estate costs in India. It also highlights how to use the HSN code in GST for proper compliance.

What is the GST on Cement?

The GST on cement in India is currently 28%, covering all standard types like Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC). Cement falls under HSN code 2523, which determines this tax rate.

• For intra-state supplies, this 28% GST is split into 14% CGST and 14% SGST. 
• For inter-state supplies, the seller charges the full 28% as IGST. 

The total tax burden remains the same, but the tax components differ based on the place of supply.

Before GST was launched in 2017, multiple taxes applied, including central excise duty, Value Added Tax (VAT), and various state-level levies, making calculations complex. Now, with GST, these calculations are much simpler and more transparent.

Knowing the GST on cement is important, as even a single bag for home repairs includes it. For example:

• A 50 kg bag of cement priced at ₹400 incurs 28% GST, which adds ₹112, bringing the total to ₹512.
  
• For a contractor purchasing 1,000 bags at the same rate, GST adds ₹1,12,000 to the total cost.

List of Cement HSN Codes and Their GST Rates in India

Cement products in India fall under different HSN codes, which determine the applicable GST rate:

Cement Product	HSN Code	GST Rate (%)
Cement Clinkers	25231000	28
White Portland Cement (coloured or not)	25232100	28
Ordinary Portland Cement (dry)	25232910	28
Ordinary Portland Cement (coloured)	25232920	28
Portland Pozzolana Cement (PPC)	25232930	28
Portland Slag Cement	25232940	28
Other Portland Cement (unclassified)	25232990	28
Aluminous Cement	25233000	28
Other Hydraulic Cements (e.g., Sagol, Ashmoh)	25239010	28
High Alumina Refractory Cement	25239020	28
Other Hydraulic Cements (miscellaneous types)	25239090	28
Articles of cement, concrete, or artificial stone	6810 / 681011 / 681019 / 681091 / 681099	18
Cement Bricks	68101110	18
Cement Tiles	68101910	18
Prefabricated Cement/Concrete Components	68109100	18

Note: Products under HSN 6810 series (articles of cement, blocks, tiles, and prefabricated components) are generally taxed at 18% GST, while all primary cement types under HSN 2523 attract 28% GST.

Why is Cement Taxed at 28% GST in India?

The Indian government taxes cement at 28% GST, one of the highest rates under the Goods and Services Tax regime. While this may seem high, it serves multiple purposes: 

Reasons Behind the 28% GST:

• Essential Material: Cement is crucial for construction and infrastructure projects.
  
• Revenue Stability: Lowering the rate could cause a revenue shortfall of around ₹13,000 crore annually.
  
• Market Regulation: The competitive cement industry, with large and regional manufacturers, influenced the decision to maintain this rate. It balances production costs, demand, and pricing practices.
  
• Input Tax Credit: Businesses and contractors can claim ITC to reduce the overall tax burden, helping manage project costs and cash flow.

Cement Taxation Before GST (Pre-2017)

Before GST, cement was subject to multiple taxes, making cost calculations complex:

• Central Excise Duty: Up to 12.5%
  
• State VAT: 12%–14.5% depending on the state
  
• Other Levies: Entry taxes, octroi, and local charges

Combined taxes often exceeded 31%, varying by state. 

For example:

• Maharashtra: 50 kg OPC bag at ₹400 → Excise ₹50 + VAT ₹48 = ₹498
  
• Gujarat: Same bag → Excise ₹50 + VAT ₹56 = ₹506

GST simplified this by introducing a uniform 28% rate for standard cement types like OPC, PPC, and Slag Cement. This eliminated cascading taxes, eased budgeting, and streamlined ITC claims for businesses. 

How Can You Reduce Construction Costs Despite 28% GST on Cement? 

The 28% GST on cement in India affects more than just material prices. It influences overall construction costs, project budgets, and cash flow.

Here are practical strategies to manage cement GST effectively:

1. Plan Material Purchases in Advance: Cement is a key construction material, and bulk purchases can significantly increase costs. Planning material requirements ahead of time and including GST in the budget helps avoid unexpected expenses and maintain smooth cash flow.

2. Maximize Input Tax Credit (ITC): Registered businesses and contractors can claim Input Tax Credit (ITC) on GST paid for cement used in construction projects. However, ITC on cement is blocked if it is used for the construction of immovable property for own use, as per Section 17(5) of the CGST Act.

3. Monitor and Update Project Budgets: GST can substantially add to project costs, especially in large-scale construction. Regularly updating budgets to include GST helps prevent overruns and keeps projects on track.

4. Negotiate with Suppliers: Suppliers may offer discounts or flexible payment terms for bulk orders. Effective negotiation can offset GST registration costs and improve overall project profitability.

5. Consider Material Alternatives or Optimized Mixes: Using a combination of cement types or optimized concrete designs can reduce cement usage without affecting quality. This indirectly lowers GST liability while maintaining construction standards.

Applying these strategies helps manage GST expenses effectively and keeps construction projects on budget.

How to Calculate GST on Cement? Formula

Here’s the formula to easily calculate GST on cement:  

Formula:

GST Amount = (Cost of Cement × GST Rate)/100

Total Price = Cost of Cement + GST Amount

Let’s break it down with an example:

Imagine you’re purchasing a cement bag that costs ₹500. Now, let’s calculate the 28% GST:

GST Amount:

(500 × 28)/100 = ₹140

So, the total cost of your cement bag, including GST, would be:

Total Price:

₹500 + ₹140 = ₹640

By understanding how GST works, you can now estimate how much more you’ll need to budget for any cement purchase. 

How does Cement GST Impact Real Estate Prices?

The 28% GST on cement in India doesn’t just affect the price of a single bag. It creates a ripple effect across the construction and real estate industry, impacting costs, timelines, and property prices.

Let’s explore how GST on cement influences the real estate market:

1. Higher Construction Expenses: When GST is applied to cement, overall construction costs rise. Builders must adjust their budgets to accommodate the higher material costs. This increases the total expenditure for projects.

As a result, property prices can rise, making it harder for developers to balance margins and affordability. 

2. Impact on Property Demand: Rising construction costs often lead to higher property prices, which can reduce demand. Buyers may hesitate to invest in properties that have become more expensive, slowing down sales.

Affordable housing is particularly affected, as middle-income families may find rising costs unaffordable, which impacts overall market demand.

3. Pressure on Developer Profits: The 28% GST on cement can tighten developers’ profit margins, especially if they cannot fully claim ITC on cement and other building materials.

This may force developers to absorb the extra cost or pass it on to buyers, creating financial pressure in an already competitive market.

4. Inflation in Property Prices: Higher construction costs due to GST indirectly increase property prices. Both residential and commercial sectors feel the impact.

Buyers and renters may face higher costs, making property ownership or leasing more challenging. 

For example, a ₹50 lakh construction project could see an additional ₹1–2 lakh due to GST on cement alone, which may reflect in the final property price.

Developers, contractors, and buyers should factor in cement GST when planning projects or investments.

Confused about the correct cement HSN code or GST rate? RegisterKaro helps with GST registration, HSN classification, and compliance, ensuring you apply the right tax rates without errors. Contact us for simple, reliable GST support.

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