The latest GST rate cuts are set to ease the financial burden on both developers and homebuyers, with reforms officially taking effect from September 22, 2025, coinciding with the start of Navratri. Under GST 2.0, key construction materials such as cement, granite, marble, and ready-mix concrete will now attract lower tax rates. Cement and concrete have shifted from the 28% slab to 18%, while bricks, tiles, and sand are down to 5% from 18%. Paints and varnishes will now fall under the 18% category instead of 28%. This rationalisation is expected to reduce overall project costs, giving developers room to pass on benefits to customers in the form of affordable housing.
Industry experts suggest that construction costs could drop by 3–5% across the country due to the GST cut on critical building inputs. This reduction could lead to a 1–1.5% fall in home prices, particularly benefiting affordable and mid-segment housing buyers. Developers are expected to witness savings of nearly ₹1,000 per square meter in construction costs, which may directly be transferred to customers. If cement companies also lower their prices in line with GST reforms, the effect could be even more substantial for the real estate sector, further improving affordability.
The real estate industry bodies, including NAREDCO and CREDAI, have welcomed the move, calling it a progressive step that boosts confidence among both builders and buyers. CREDAI noted that along with tax incentives in Budget 2025 and reduced repo rates by the RBI, GST 2.0 will create strong momentum for housing demand during the festive season. Market analysts believe that a 20% reduction in GST burden across residential, commercial, industrial, and warehousing projects will not only cut costs but also attract first-time homebuyers.
However, experts caution that the price benefit may not be immediate in ongoing projects that have already procured most construction materials. In such cases, homebuyers can expect festive offers, flexible payment plans, or discounts instead of direct price cuts. For upcoming projects, the impact of GST cuts will be more visible, as fresh procurement under lower tax rates allows developers to offer competitive pricing. Even modest savings of ₹1–3 lakh could help buyers reduce upfront payments or loan requirements, providing meaningful relief in mid-income housing segments.
Overall, GST 2.0 is expected to provide a timely boost to real estate just ahead of the festive season, enhancing affordability and stimulating housing demand in India.
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