Cement is a fundamental material in the construction industry, playing a crucial role in building homes, roads, bridges, and large infrastructure projects. As one of the most essential commodities, it’s subject to Goods and Services Tax (GST) in India, which is vital for both consumers and businesses in the construction sector to understand. Along with the GST rate, the HSN (Harmonized System of Nomenclature) code is also key for ensuring proper taxation and smooth transactions.
In this comprehensive post, we will explain everything you need to know about the GST rate for cement, how to calculate it, and the relevant HSN code for different types of cement.
GST Rate on Cement:
Cement, a critical construction material, is subject to 28% GST under India’s GST regime. This applies to all types of cement used in construction, including:
- Ordinary Portland Cement (OPC)
- Pozzolana Portland Cement (PPC)
- White Cement
- Rapid Hardening Cement
- Specialty Cements (e.g., air-entraining cement)
So, no matter the type of cement, the GST rate is uniformly 28% for both wholesale and retail transactions.
Read to know How GST impacts on Cement for Construction in 2025?
HSN Code for Cement:
The HSN Code is a standardized international system used for classifying goods for taxation. Cement, regardless of the specific type, falls under the HSN Code 2523, which covers various kinds of cement products like Portland cement, aluminous cement, and slag cement.
- HSN Code for Ordinary Portland Cement (OPC): 2523
- HSN Code for Pozzolana Portland Cement (PPC): 2523
- HSN Code for White Cement: 2523
The HSN code helps ensure that the correct GST rate is applied to cement products and assists in seamless trade and taxation practices.
How to Calculate GST on Cement:
The calculation of GST on cement is straightforward. To calculate the GST on any cement product, you need to:
- Know the Base Price: The base price is the price of the cement excluding taxes, transportation, or additional charges.
- Apply the GST Rate: The GST rate for cement is 28%.
- Calculate the Total Price: Add the GST amount to the base price to get the total cost of the cement.
Formula for GST Calculation on Cement:
GST Amount=Base Price× 28% or Base Price × 0.28
Total Price (Including GST)=Base Price + GST Amount
Example Calculations:
1. Ordinary Portland Cement (OPC)
Let’s assume the base price of OPC is ₹400 per bag.
- Base Price = ₹400
- GST Amount = ₹400 × 28% = ₹112
- Total Price = ₹400 + ₹112 = ₹512
Thus, the total cost of one bag of OPC cement, including GST, will be ₹512.
2. Pozzolana Portland Cement (PPC)
Now, let’s assume the base price of PPC is ₹350 per bag.
- Base Price = ₹350
- GST Amount = ₹350 × 28% = ₹98
- Total Price = ₹350 + ₹98 = ₹448
So, the total cost of one bag of PPC cement, including GST, will be ₹448.
3. White Cement
For premium products like white cement, which is typically more expensive, suppose the base price is ₹900 per bag.
- Base Price = ₹900
- GST Amount = ₹900 × 28% = ₹252
- Total Price = ₹900 + ₹252 = ₹1,152
Therefore, the total cost for one bag of white cement, including GST, will be ₹1,152.
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Additional Charges:
It’s essential to remember that the GST is only applied to the base price of cement. Additional charges such as:
- Transportation Costs
- Packaging Costs
- Handling Fees
These charges are added on top of the base price and GST to arrive at the final price of the cement. These costs may vary based on factors like distance, type of packaging, and regional taxes.
GST for Cement Dealers and Businesses:
For businesses such as cement distributors or wholesalers, the 28% GST is applicable when selling cement. However, they can avail of the Input Tax Credit (ITC), which allows them to offset the GST paid on their purchases against the GST they collect on their sales.
How ITC Works:
Let’s look at an example. Suppose a cement dealer buys cement worth ₹50,000 (including GST) and sells it for ₹60,000 (including GST).
- The dealer collects ₹60,000 × 28% = ₹16,800 as GST on the sale.
- The dealer has paid ₹50,000 × 28% = ₹14,000 GST on the purchase.
The dealer can claim an ITC of ₹14,000 and offset this against the GST collected on the sale. Therefore, the net GST payable to the government will be: ₹16,800 (GST collected)− ₹14,000 (ITC)=₹2,800.
This mechanism helps businesses reduce the overall tax burden and ensure smooth functioning within the GST system.
Conclusion:
To recap:
- GST on Cement: Cement is taxed at 28% GST, irrespective of the type (OPC, PPC, white cement, etc.).
- HSN Code: All types of cement fall under HSN Code 2523.
- GST Calculation: Simply multiply the base price of cement by 28% and add that amount to the base price to get the total price inclusive of GST.
- Additional Charges: Transportation, packaging, and handling fees will be added to the base price and GST to calculate the final price.
- Input Tax Credit: Businesses can claim ITC to reduce their tax burden on purchases, making it important for cement dealers and wholesalers to stay compliant.
Understanding these details helps businesses maintain proper records, ensure compliance with tax laws, and avoid any penalties. Whether you’re a consumer or a business in the cement sector, being aware of how GST works on cement is essential for transparent transactions and efficient operations.
