Govt to Retain 12% GST on Bricks, 28% on Tobacco, Notification Expected This Week

The Goods and Services Tax (GST) regime continues to be one of the most dynamic aspects of India’s indirect tax system.

According to industry reports, the central government is preparing to issue a fresh notification this week confirming that 12% GST will be retained on bricks, while the 28% GST slab will continue to apply to tobacco products. This decision is expected after recent discussions within the GST Council, signaling continuity for both the construction and tobacco sectors.

While many industry players had anticipated possible changes in the rates during the recent GST Council meeting, the government seems keen on maintaining stability in tax slabs, especially for items that have significant social, economic, and health implications.

GST on Bricks: Why 12% Slab Matters

The brick industry in India plays a vital role in construction, real estate, and infrastructure development. Housing projects, both urban and rural, heavily depend on brick supplies. The imposition of 12% GST on bricks had initially raised concerns among small-scale brick kiln owners, many of whom operate in semi-urban and rural regions.

Govt to Retain 12% GST on Bricks, 28% on Tobacco:

By retaining the 12% rate, the government aims to balance tax revenues with affordability. A lower slab might reduce government collections, while a higher rate could have a cascading impact on housing project costs.

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With the government also providing subsidies and loans for affordable housing schemes like Pradhan Mantri Awas Yojana, stability in GST rates ensures predictable costing for builders and contractors.

For brick manufacturers, the retention of the 12% slab also means that input tax credit will continue, making raw material purchases and compliance more transparent. Industry experts note that the decision may encourage more brickmakers to remain within the formal tax system instead of operating in the unorganized sector.

GST on Tobacco: Public Health and Revenue

Tobacco products, on the other hand, remain firmly under the 28% GST slab, which is the highest category under the tax system.

This is in line with the government’s stated public health policy of discouraging tobacco consumption through heavy taxation. Additionally, tobacco contributes substantially to indirect tax revenues.

By keeping tobacco at 28%, the government balances two priorities—curbing demand and safeguarding revenue streams. The Council has also, in past years, imposed additional cess over and above GST to ensure the effective tax burden on cigarettes and other tobacco products remains high.

Health activists have welcomed the move, as India continues to battle rising healthcare costs due to smoking-related illnesses. With the World Health Organization (WHO) recommending higher taxes on tobacco to reduce usage globally, India’s stance aligns with international commitments.

Industry Reactions and Consumer Impact

Builders’ associations and real estate developers had lobbied for a possible reduction in GST on bricks, arguing that it could reduce construction costs.

However, they also recognize that retaining the slab avoids sudden price adjustments in ongoing projects. Stability in taxation, they argue, is often more beneficial than frequent rate cuts or hikes.

For consumers, the direct impact will vary:

• Homebuyers may see no change in pricing structures due to GST stability, but input credits for builders could indirectly ease rising costs.

• Tobacco consumers, meanwhile, will face no relief, as cigarettes, smoking products, and chewing tobacco remain among the items with the steepest tax burden.

From a fiscal perspective, the decisions indicate the government’s focus on balancing revenue targets for 2025–26 while ensuring that essential housing materials do not become prohibitively expensive.

GST Council and Policy Continuity

The GST Council, comprising Union and state ministers, remains central to taxation decisions. Recent meetings have focused more on compliance simplification, rate rationalization for certain consumer goods, and monitoring of states’ revenue compensation. The decision to retain slabs on bricks and tobacco shows the Council is not inclined toward frequent policy shifts in sensitive sectors.

Policymakers argue that while rate rationalization is important, frequent changes lead to compliance challenges for businesses. For this reason, retaining rates where collections are stable and sectoral outcomes are predictable makes long-term sense.

Broader Implications for the Economy

The decision could also be seen as a signal of fiscal prudence. With India targeting high capital expenditure while aiming to keep deficits under control, tax stability becomes a tool for sustained government income. Tobacco, despite its health risks, contributes significantly to annual GST collections.

Bricks, meanwhile, influence construction—a high-employment sector with multiplier effects on steel, cement, and allied industries.

Analysts note that by finalizing and notifying the rates this week, the government will provide businesses adequate time to plan for the festive season construction demand, which usually peaks post-monsoon.

What to Expect in the Notification

The official notification expected within the week will:

• Reconfirm the 12% GST slab for all categories of bricks, including those supplied by brick kilns.

• Reiterate the 28% GST slab on tobacco products along with the existing cess structure.

• Provide compliance guidelines for businesses, particularly manufacturers and traders, ensuring updated invoicing and GST returns for October quarter filings.

Conclusion

The government’s decision to retain the existing GST rates on bricks and tobacco reflects a desire for stability, fiscal prudence, and alignment with social objectives. While builders may have wished for lower rates, continuity enables predictable cost planning. On the other hand .

retaining the highest tax slab on tobacco reinforces India’s public health commitments and ensures steady tax revenue.