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The Goods and Services Tax (GST) Council, in its marathon 56th meeting that lasted over 10 hours on Wednesday, cleared the long-awaited next-generation reforms under the eight-year-old indirect tax regime.
The move, promised by Prime Minister Narendra Modi as a ‘Diwali Gift’ during his Independence Day speech, marks a major milestone as it paves the way for a simplified two-slab structure--5 percent and 18 percent--along with a 40 percent “demerit rate” reserved only for super luxury, sin, and demerit goods.
The reforms are aimed at reducing the tax burden on the common man, easing compliance hassles, and boosting ease of doing business with automated refunds and a simplified registration process.
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Cement bags could cost Rs 30 cheaper soon
One of the biggest takeaways for industry is the reduction of GST on cement from 28 percent to 18 percent, effective September 22, 2025.
According to JM Financial report, this will lower cement prices by Rs 25–30 per bag. While immediate demand elasticity may remain muted, the cut structurally positions the industry to enhance net realisations and margins in the medium to long term.
The report noted that reducing GST will free up working capital locked in non-trade sales and with channel partners, improving cash flow across the industry. On the cost side, the increase in GST on coal from 5 per cent to 18 per cent will have little impact since companies can claim full input tax credit.
At the same time, removing the clean energy cess of Rs 400 per tonne will be a big positive, especially for cement companies in East and Central India.
"Near-term demand elasticity is expected to remain limited. Ahead of the revised rate implementation (effective 22nd Sep), dealers are likely to maintain lean inventory levels. However, rate cut is supportive for housing demand over the medium to long term," the report noted.
Will this make homes cheaper for you?
Industry leaders from the real estate sector hailed the GST rationalisation move, calling it a timely reform ahead of the festive season.
Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd welcoming the Council's move said, "By reducing the tax burden, the move comes as a major relief for the common man. The housing sector, particularly, stands to benefit from GST reduction on input materials like cement from 28 per cent to 18 per cent and granite blocks from 12 per cent to 5 per cent, as this will ultimately reduce home prices for consumers and create sustainable demand across segments.”
Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, highlighted that the reduction in GST on key raw materials such as cement and marble blocks would bring down construction costs, simplify compliance for developers, and ultimately make homes more affordable for buyers.
But here’s the catch: Cement isn’t the only cost
Vikas Bhasin, Managing Director of Saya Group, observed that while the GST reduction on cement is a welcome step that will help lower construction costs, its overall impact on property prices will be limited.
He pointed out that construction materials make up only 25–30 per cent of a project’s total cost, and cement is just one of many inputs, meaning the benefit to end-buyers may not be significant. "A more meaningful reform would have been a reduction in GST on under-construction properties, as that would have directly and significantly benefited homebuyers.” Bhasin said.
What investors should watch in the fine print
Zee Business Managing Editor Anil Singhvi highlighted that investors need to carefully assess the fine print before betting on sectoral stocks. “Lower GST is definitely positive for consumers, but it doesn’t always mean companies benefit equally… Many could actually lose out if they are not eligible to claim ITC," he said.
The market guru recommends tracking these sectors for ITC impact: health & life insurance, pharmaceuticals, cement, beauty & personal care, and budget hotels.
GST 2.0 is being projected as a pro-consumer and pro-business reform. For the cement and housing sector, the benefits are clear: cheaper input costs, easier compliance, and better liquidity. But experts caution that companies may not always pocket extra profits, and buyers shouldn’t expect overnight price cuts in homes.
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