1) What exactly changed “now” vs. earlier (and what didn’t)

A. Big recent change (September 2025): GST on cement cut from 28% → 18%.
The GST Council has officially reduced GST on cement by 10 percentage points (from 28% to 18%). This is notified via the Government’s press release and widely reported by business media. The reduction directly lowers cement invoices and therefore embedded construction costs wherever input tax credit (ITC) is not available (most housing since 2019).


B. Current GST on sale of under-construction residential homes stays at 5% (standard) and 1% (affordable), without ITC.
These buyer-side rates—introduced in April 2019—remain the operative regime:

  • 5% GST on under-construction residential units (other than “affordable”), without ITC.
  • 1% on “affordable housing,” without ITC.
  • Ready-to-move homes (with OC) continue to attract no GST on the sale.

C. Key inputs & services that did not change (as of today)

  • Steel/TMT bars: generally 18% GST.
  • Tiles & sanitary ware: typically 18%, some ceramic categories historically at 28% (check product specifics).
  • Ready-mix concrete (RMC): commonly 28% GST listing (vendor/category dependent).
  • Professional services (architects, PMC, design etc.): 18% GST.

Note: Separately, the government has announced broad rate rationalisation—moving many goods/services to a two-slab design (5% & 18%)—with media coverage indicating wide changes. For construction, the cement cut is confirmed; other construction inputs remain as above unless and until a specific notification alters them. Always reconcile with the final rate notification for your precise item/HSN.

2) Why the cement cut matters disproportionately

Cement is a top-three cost head in RCC buildings. Typical cost shares (for a standard mid-range Indian residential build) put cement at ~14–16% of material cost; and materials are ~55–65% of total construction cost (balance is labour, prelims, overheads, approvals, etc.). That places cement at roughly ~9–10% of the all-in construction cost.

When GST on cement drops from 28% to 18%, the gross cement line (invoice total) falls from 1.28× base to 1.18× base. That is a 7.8125% reduction on the cement line item itself (because 0.10 ÷ 1.28 ≈ 7.81%).

Translation into project savings:

  • If cement is ~9% of your total build cost, and that line item goes down by ~7.81%, your whole project drops by ~0.7–0.8%.
  • Real projects differ (tall towers, deep basements, raft foundations, heavy RCC cores) and can consume more cement; such projects save a bit more.

Industry trackers in 2024–25 also note cement prices were already easing by ~15% vs a year ago; the new tax cut stacks on top of that market easing.

3) Our method and assumptions (so you can audit the math)

To keep the analysis “to the point” and comparable across cities, I use transparent rules of thumb grounded in published ranges:

  • City-wise base construction cost (house/standard residential): recent guides list typical ₹/sq ft ranges by city. I use mid-points from a 2025 city table as the baseline (pre-cut).
  • Materials share of total: 60% (mid-point of 55–65%).
  • Cement share within materials: 15% (mid of 14–16%).
  • Effective saving on cement line: 7.8125% (since 28%→18% reduces the gross invoice by 0.10/1.28).
  • Thus, project-level saving factor ≈ 0.60 × 0.15 × 7.8125% = 0.703% of the total civil cost.

For apartment projects with heavier RCC (cores/basements), I also show a “project/RCC-heavy” variant using 65% materials and 16% cement share, giving ≈ 0.812% saving. (That’s 0.65 × 0.16 × 7.8125%.)

4) City-wise savings: individual house builds (owner-built)

The table below uses mid-point ₹/sq ft (pre-cut) for a standard owner-built house and applies the 0.703% project saving. I also show absolute savings for 1,000 sq ft and 1,500 sq ft homes.

City Typical Cost (₹/sq ft) Saving from cement GST cut (₹/sq ft) Save on 1,000 sq ft (₹) Save on 1,500 sq ft (₹)
Mumbai 3,250 22.9 22,900 34,350
Pune 2,300 16.2 16,200 24,300
Delhi NCR 2,600 18.3 18,300 27,450
Bengaluru 2,400 16.9 16,900 25,350
Chennai 2,200 15.5 15,500 23,250
Hyderabad 2,050 14.4 14,400 21,600
Kolkata 1,950 13.7 13,700 20,550
Ahmedabad 1,800 12.7 12,700 19,050

Sources for city rates: 2025 city-wise ranges (I used mid-points). Your actual quotes depend on finish level, plot constraints, soil/foundation type, and contractor/builder margin.

Owner-build note: In an owner-build, you pay GST on materials (like cement) and cannot claim ITC (you’re not a registered developer). The cement GST cut therefore directly lowers your out-of-pocket cost—the savings above are realized by you.



5) City-wise savings: apartment/residential projects (developer-built)

For developer projects under the 5%/1% without ITC scheme, input taxes on materials are a cost (no credit). So the cement GST cut reduces embedded cost almost one-for-one.

Using the RCC-heavy project factor (≈ 0.812% of total):

  • Rule of thumb: Saving per sq ft ≈ 0.00812 × your project’s build cost (₹/sq ft).
  • To illustrate, here’s how that maps if we use a rounded “builder’s” cost band of ₹2,200–₹3,000 per sq ft (typical civil + basic finish, ex-land, ex-marketing):
Example Project Build Cost (₹/sq ft) Saving from cement GST cut (₹/sq ft)
2,200 17.8
2,400 19.5
2,600 21.1
2,800 22.7
3,000 24.4

Project-level examples

  • Mid-rise project, 2,00,000 sq ft @ ₹2,400/sq ft:
    Saving ≈ ₹19.5/sq ft × 2,00,000 = ₹39,00,000 (≈ ₹39 lakh).

  • High-rise (RCC-intensive), 3,50,000 sq ft @ ₹2,800/sq ft:
    Saving ≈ ₹22.7/sq ft × 3,50,000 = ₹7,94,50,000 (≈ ₹7.95 crore).

If your tower has deep basements, raft/pile foundations, thick shear walls, heavy podiums, your cement intensity is higher than the generic 16% of materials, and savings will be bigger.

6) Buyer-side GST vs. builder-side GST: the “existing vs. current” effect in plain English

Before (yesterday)

  • Cement @ 28% inflated material bills. Because residential sales GST (5%/1% without ITC) blocks credits, that 28% was locked in the cost structure of most housing projects and owner-builds.
  • Under-construction flat sold to a homebuyer: 5% (or 1% affordable) on the agreement value (excluding land valuation per rules). No ITC; developers loaded input taxes into pricing.

Now (today)

  • Cement @ 18%: a straight 10-point cut → ~7.81% lower cement invoice → roughly 0.7–0.8% lower total construction cost for typical residential works (more if cement-heavy). This is the material change specifically confirmed for construction inputs so far.
  • Under-construction sale GST remains 5%/1% (no ITC). So, buyers of under-construction homes still pay the same output GST; however, builders’ internal cost base drops, giving headroom to hold prices, improve margins, or pass partial relief in competitive markets.

Net effect snapshot

Stakeholder “Existing” (pre-cut) “Current” (post-cut) What changes in ₹ terms
Owner building a house Paid 28% GST on cement Pays 18% on cement ~0.7% saving on the total build (see city table)
Developer building apartments Cement line carried 28% GST into cost Cement line now 18% ~0.8% project cost relief (RCC-heavy); scale by size
Homebuyer (under-construction) 5% (1% affordable) on flat value; no ITC Same Output GST unchanged; pricing may soften if cost relief is passed through
Homebuyer (ready-to-move) No GST No GST No change

7) City-wise impact vs. saving explained

GST is a central levy; rates don’t vary by city. But your savings (₹/sq ft) vary by city because baseline construction costs vary by market (labour rates, logistics, local material prices, regulatory overhead). Current 2025 city bands broadly look like this (midpoints used earlier): Mumbai highest, then Delhi NCR/Bengaluru/Pune, then Chennai/Hyderabad, then Kolkata/Ahmedabad.

  • High-cost markets (Mumbai, Delhi NCR) → same 0.7% drop translates to a bigger ₹/sq ft saving (₹18–23/sq ft).
  • Lower-cost markets (Ahmedabad, Kolkata) → smaller ₹/sq ft saving (₹13–13 vs. ₹12–13/sq ft).
  • For projects with heavier cement (coastal corrosion detailing, high seismic detailing, deeper foundations), scale the 0.7% to ~1% or a shade more.

8) Beyond cement: where GST still bites (and what to watch)

  • Steel/TMT @ 18% remains a major cost head; prices are volatile and structurally significant (15–20% of total cost in many builds). No announced GST relief here yet.
  • Tiles/sanitary @ 18% (some ceramics at 28%), paints often 18–28%: finishes can move the needle in premium projects.
  • RMC @ 28% in many listings: if you pour large RCC packages via RMC, your tax incidence here is still high; watch for any follow-up rationalisation specific to concrete.
  • Professional services @ 18% (architectural, design, PMC, QS): unchanged.

Tip: For apartment projects selling at 5%/1% without ITC, every non-creditable input tax is embedded; procurement optimisation (source selection, logistics, wastage control, cement type selection, pour planning) now converts directly to margin or buyer value.

9) Two worked examples (fully numeric)

(A) Individual home, Pune, 1,500 sq ft

  • Baseline (pre-cut) typical cost: ₹2,300/sq ft → ₹34.5 lakh for 1,500 sq ft.
  • Saving from cement GST cut: ₹16.2/sq ft → ₹24,300 total (table above).
  • New indicative total: ~₹34.26 lakh (assuming no other changes).

If you were planning in 2024–25 when cement already eased by ~15% in market price, you now stack the tax cut on top of that market softening; your total cement line could be materially lower than 2023/early-2024 levels.

(B) Residential project, Bengaluru, 2,80,000 sq ft, RCC-heavy

  • Builder’s civil+basic finish cost (ex-land): say ₹2,600/sq ft → ₹72.8 crore.
  • Saving factor (RCC-heavy): 0.812% → ₹21.1/sq ft.
  • Project saving: ₹21.1 × 2,80,000 = ₹5,90,80,000 (≈ ₹5.91 crore).

What happens to buyer pricing? Output GST on the flat stays 5% (1% affordable). In competitive sub-markets, expect part of the cost relief to hold sale prices or fund offers/amenities rather than broad ticket-price cuts.

10) Design & procurement levers to amplify the GST-driven savings

  1. Match cement type to structural need (OPC/PPC/PSC): right grade, fewer over-design margins → fewer bags per m³; the tax cut multiplies the benefit.
  2. RMC vs. site batching: if you’re locked into RMC (28%), explore site batching for suitable pours (quality-controlled) to reduce tax incidence—balance against logistics/QC risks.
  3. Optimise concrete design (admixture strategy, water-cement ratio, target strength vs. characteristic strength) to cut cementitious content safely.
  4. Wastage control (tight pour windows, cold-joint prevention, pump planning, mould reuse) → real bag-count reduction.
  5. Scheduling basements/cores into cooler months can reduce curing losses and rework, indirectly trimming cement.
  6. Value engineering finishes (tiles/sanitary/paints at 18%): right specs for segment reduce 18%-taxed spend.

11) FAQs (laser-focused)

Q1. I’m buying an under-construction flat. Do I pay less GST now?
No. The buyer-side rate remains 5% (or 1% affordable), without ITC. The builder’s cost drops due to cement tax relief; pass-through depends on market competition.

Q2. I’m constructing my own house. Do I save cash immediately?
Yes. Your cement invoices now carry 18% GST (not 28%), so your cash outlay reduces—roughly ₹13–₹23 per sq ft in major cities (see table), more in cement-heavy designs.

Q3. What about steel?
Steel/TMT is still generally 18% GST; no cut announced there (as of today).

Q4. What if my project uses a lot of RMC?
RMC is commonly listed at 28% GST—no change flagged yet. Using more site-batched concrete (where quality allows) can reduce tax incidence.

Q5. Does city affect GST?
No—the rate is national. City only affects the base cost (labour/logistics/regulatory), so the ₹/sq ft saving differs because the base differs.

12) Compact “existing vs. current” tax impact—with numbers

Earlier (cement @ 28%)

  • Example (₹2,400/sq ft project, materials 60%, cement 15% of materials): cement share ≈ 9% → cement gross ~₹216/sq ft on average.
  • Cement invoice at 28% vs base: 1.28×.

Now (cement @ 18%)

  • Same base cement quantity/price: invoice becomes 1.18× → 7.81% cheaper cement line.
  • Project impact: 0.703% of total (house) or 0.812% (RCC-heavy project) savings.

So:

  • House @ ₹2,300/sq ft (Pune): save ₹16.2/sq ft.
  • Project @ ₹2,800/sq ft (RCC-heavy): save ₹22.7/sq ft.
  • Buyers’ 5%/1% output GST: unchanged.

13) City-wise impact summary (at a glance)

  • Mumbai, Delhi NCR: Highest ₹/sq ft saving, ~₹18–23/sq ft for houses; projects save more per sq ft if RCC-intensive.
  • Bengaluru, Pune: Strong tech-city costs → ₹16–19/sq ft house savings; project savings ~₹19–23/sq ft depending on baseline.
  • Chennai, Hyderabad: ₹14–16/sq ft house savings typical.
  • Kolkata, Ahmedabad: ₹12–14/sq ft house savings; still meaningful in percentage terms.
    (Values sourced from 2025 cost bands; see table and sources.)

14) Risks, caveats, and how to align your estimate

  • Market prices vs. tax rates: Retail cement prices can move; the tax cut is certain, but ex-factory/retail may adjust with demand, season, and freight. Use fresh supplier quotes.
  • Scope creep: If finish specification rises (tiles/sanitary/paint—often 18–28%), your total tax-bearing spend can offset some cement savings.
  • RMC usage: Heavy RMC use (28%) curbs the relative boost from cement cut—watch this in high-rise pours.
  • Policy follow-ups: The government has trailed a wider 5%/18% two-slab regime; if/when other construction inputs move to 5% or 18%, redo the math—upside risk to savings.

Bottom line (one paragraph)

  • Before: Cement at 28% GST inflated costs in a no-ITC housing regime (5%/1% to the buyer).
  • Now: Cement at 18% gives ~0.7–0.8% total cost relief on typical residential builds, showing up as ₹12–₹23 per sq ft savings for owner-built houses across major cities, and ~₹18–₹24 per sq ft for RCC-heavy apartment projects—scaling into tens of lakhs to several crores on large developments. Buyer-side GST on under-construction units remains 5%/1%, but embedded costs are lower—so expect price stability or sharper offers where markets are competitive.

Sources (key, most load-bearing)

  • Cement GST cut (28% → 18%): Government PIB note; major business dailies (Sep 2025).
  • Buyer-side housing GST (5%/1%, no ITC): Real estate GST explainer (unchanged), under-construction vs ready-to-move.
  • Steel/TMT 18%: Current GST listings across multiple sources.
  • City-wise construction cost ranges (2025): collated guidance for typical house builds.
  • Material cost shares and recent trends: cement share of materials and cost trend snapshots.

Team

CBEC India