GST Overhaul Paves the Way for Affordable, Boosted Real Estate Growth

In a landmark decision at its 56th meeting held on September 3, 2025, the GST Council has unveiled sweeping reforms designed to simplify tax structures and substantially reduce costs across the real estate sector. At the heart of this transformation lies the dramatic cut in GST rates on critical construction inputs—from cement to marble—delivering a direct and powerful boon to developers and homebuyers alike.

Key Changes in GST Structure

•    Cement GST reduced from 28% to 18%, a move expected to significantly lower construction costs, particularly in the real estate and infrastructure sectors.
•    GST on marble, travertine, granite blocks, and sand-lime bricks cut from 12% to 5%, making finishing and structural materials more accessible.
•    The GST regime has been simplified from four rate slabs to two—5% and 18%, streamlining taxation across numerous goods and boosting ease of compliance.

With construction costs projected to drop by anywhere from 3 to 5 percent—and possibly even up to 10 percent in some cases—builders are poised to pass on savings to buyers, especially in affordable and mid-income housing segments. Already, the prospect of lower home prices is generating buzz: some estimates suggest property prices may fall as much as 5 percent as a result.

The timing of these cuts couldn’t be more strategic. Rolling out ahead of the festive season, the move is expected to boost sentiment and spur demand as buyers await more accessible pricing.

While the benefits seem clear, industry watchers note that the real impact rests on whether developers translate input cost reductions into consumer savings—or retain them to protect their margins. Still, many market observers expect that competitive pressures and heightened consumer awareness will encourage price pass-through.

Prashant Sharma, President, NAREDCO Maharashtra said, “NAREDCO Maharashtra welcomes the GST slab rationalization rolled out effective September 22, 2025. Bringing essential construction materials—particularly cement—from 28% down to 18%, and materials like granite and sand-lime bricks to 5%, delivers significant cost relief across the construction value chain. This reduction eases input costs, improves project feasibility, and allows developers to pass savings on to homebuyers—especially in the affordable housing segment. Announced during the festive season, this move not only uplifts consumer sentiment but also aligns with the Government’s 'Housing for All' mission.”

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory said, “The shift to a two-slab GST regime (5% and 18%) coupled with the reduction on key inputs is a welcome structural reform. Simplified taxation not only streamlines compliance, but enables faster project execution. For buyers, this could translate into more accessible pricing and improved transparency. The timing is strategic—just ahead of the festival season—setting the stage for renewed buyer interest and a healthier real estate cycle.”

Vikas Jain, CEO, Labdhi Lifestyle & President, NAREDCO Maharashtra NextGen said, “The GST rationalization is a landmark move by the Government. The reduction in GST on construction materials will help ease the cost pressures on developers, especially in affordable and mid-segment housing. Simplifying tax slabs also brings much-needed clarity and predictability—essential for innovation in design, sustainable developments, and faster deliveries. If suppliers pass on these savings, homebuyers stand to benefit considerably.”

Navin Makhija, Managing Director, The Wadhwa Group said, “The GST reform is not just a tax tweak—it’s a strategic stimulus for the entire economy. Lower GST on cement and other finishing materials will help reduce construction costs, enabling developers to pass on the benefits to homebuyers. Reduction of GST on almost 80% of the products will leave a greater spending power in the hands of consumers, their ability to buy and borrow improves, which will naturally fuel housing demand and the economy in general. This reform is well-timed to boost sentiment and drive deeper housing penetration across emerging micro-markets.”

Shraddha Kedia-Agarwal, Director, Transcon Developers said, “This rationalization of GST is a milestone decision that eases cost burdens for developers and promises relief for homebuyers. With construction costs shrinking, there’s scope to reimagine offerings—perhaps through more thoughtfully priced units or upgraded amenities that maintain affordability. Crucially, the simplification assures buyers about transparency in overall tax burdens, which can restore trust and strengthen market sentiment.”

In effect, the reform represents a multi-pronged catalyst: trimming costs, boosting affordability, simplifying taxation, and reviving housing demand with an aim to meet the government's "Housing for All" aspirations.