Complete GST lifecycle on one platform Complete GST lifecycle on one platform
Claim max ITC with
AI-driven engine
Claim max ITC with AI-driven engine
Smart validations
& PAN-level filing
Smart validations & PAN-level filing
Download 20+ PAN-level
reports in mins
Download 20+ PAN-level reports in mins

Impact of GST on the Cement Industry



Updated on: Sep 12th, 2022


6 min read

social iconssocial iconssocial iconssocial icons

The Indian cement industry is the second largest cement producer in the world right after China.  The Indian Government is highly focused on developing infrastructure, affordable housing and roads as announced by the FM Mr. Arun Jaitley in the Budget 2017. So, the cement industry is expected to get a boost in the near future. The question though is, will the implementation of GST affect this projected growth? 

Under the VAT Regime

The tax rates for cement is extremely complex. For example, there are various rates and specific duties of excise applicable on different types of cement depending on whether they are supplied in bulk form or in packaged form or whether for industrial or trade purposes. The effective rates including excise & VAT totals up to around 24-25%.

Impact of GST on Cement

Cement will attract 28% GST, i.e., a higher rate of tax which means increased costs for the infrastructure sector.

impact of GST on cement

Refractory cement, mortars, concretes (mainly used for building industry furnaces, huge ovens etc.) will attract 18% tax.  Cement Bonded Particle Board will attract 12% The main raw materials for cement are limestone, coal and electricity. The tax rates on these are as follows:

  • Limestone is taxed at 5%
  • Coal is capped at 5%,which is a reduction from the earlier rate of 11.69%
  • Electricity is outside the purview of GST

Nothing is mentioned regarding the royalty that the cement companies pay to the state governments for quarrying limestone. Clean energy cess is levied on coal, which is not available as an input credit because it is not subsumed by GST. So, these two factors will continue to be outside the purview of GST and will be included in the cost of the cement production even after GST is implemented, as was done previously. 

Positive Impact of GST on Cement Industry

impact of GST on cement


Cement manufacturers can heave a sigh of relief as the supply chain management of cement will get a boost under GST. Most companies maintain multiple warehouses across states to avoid CST and state entry taxes. These warehouses generally operate below their capacity which leads to operational inefficiencies. Like other sectors, the cement companies will also consolidate their warehouses and maintain warehouses in areas where it is most beneficial (such as Nagpur-0-mile city) thus leading to operational economies.

Savings on Transport Costs

Most of the cement manufacturers are located near limestone quarries. But demand for cement is pan-India which means that the cost of transporting cement from the manufacturer to the buyer is pretty high. Now, with GST the logistics industry is also going to be overhauled. The transit time will decline as vehicles will spend lesser time at checkpoints. This will lead to lower transportation costs and in turn, the cement industry will save transport costs.

Less Complex Taxes

Type of CustomerType of PackagingAd-Valorem DutySpecific Duty Rs. / Metric Tonne
AllSupplied in Bulk Form12% on Transaction Value + CessNil
Industrial & Institutional SalesSupplied in Packaged Form12% on Transaction Value + CessNil
Trade SaleSupplied in Packaged Form – MRP must be mentioned12% On Maximum Retail Price with abatement of 30%+ Rs. 120/-

Currently, there are multiple excise duties applicable to cement manufacturers. There are separate rates and specific duties applicable on different types of cements depending on whether they are supplied in bulk form or in packaged form, or whether they are for industrial or trade purposes etc. All these multiple rates will be done away with under GST. Only a fixed rate of 28% will apply on cement. This will result in lesser compliances and less complexity.


All these put together may reduce the operating costs for the cement industry in the future. However, reduction in costs for the end-consumer will occur only if the cement companies pass on their savings to the consumers. Till then, it is expected that prices of cement will increase, at least temporarily, once GST is implemented. In turn, costs for infrastructure and housing which are highly dependent on cement, will also increase.

inline CTA
India’s Fastest and Most Advanced 2B Matching
Maximise ITC claims, use smart validations to correct your data and complete 2B matching in <1 minute
About the Author

DVSR Anjaneyulu, known by the name AJ, I've got a vast experience in accounting, finance, taxes and audit. I'm always keen to simplify laws for the readers and learn about the Indian finance ecosystem. I also love listening to music, travelling, and, most importantly, conversing with people to better understand the world.. Read more


Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use


ISO 27001

Data Center


SSL Certified Site

128-bit encryption