Implications of GST rate on cement and other building materials

The Indian cement industry is the second largest cement producer in the world. The Government of India is focussing on developing affordable housing. However, due to high GST rate of 28%, the cement industry is not being able to work on low economies of scale resulting in a higher cost for the affordable housing sector. The government should take serious note of reducing the GST rate from 28% to 18% to boost the cement industry which would provide an ultimate boost to the infrastructure and housing sectors. In the pre GST era, the rate of tax on steel was around 19.5% (Excise rate 12.5%, VAT 5%, CST 2%). After the implementation of GST, with effect from July 1, 2017, the rate of GST for steel is 18% and for some of the input used by the steel industry like iron, coal & transportation services, the GST rate is as low as 5%. As a result of the low tax rate, the overall cost of steel will decrease. This will have a positive impact on the housing sector.