2-Slab GST to Make Homes Cheaper: A Big Boost for Real Estate
The central government's proposal to simplify the GST system with only two slabs—5% and 18%—is expected to reduce the cost of home purchases and provide a significant boost to the real estate sector.
GstReal EstateHomebuyersConstructionTax ReformReal Estate MaharashtraAug 27, 2025
This simplicity in the tax structure will reduce the cost of developers and, in turn, benefit homebuyers, according to real estate experts. The proposed move aims to simplify the rules and provide developers with the benefit of lower taxes, which could lead to a reduction in home purchase costs.
The construction industry has been advocating for a reduction in GST rates for quite some time. Anshuman Magazine, Chairperson and CEO (India, SE Asia, and Middle East & Africa) at CBRE, stated that the high GST rates on construction materials have been a significant burden. “If the GST rates can be simplified and reduced, it will definitely have a positive impact, especially on inputs like cement, which is a chief component in construction,” he said.
For the commercial property segment, a GST rate cut could act as a much-needed respite at a time when looming tariffs in the range of 25–50 percent on Indian exports are already making investors cautious about putting fresh capital into warehousing and factory projects. Magazine added, “In such a scenario, lowering the tax burden on construction inputs can provide a significant boost and a cushion for developers and investors against volatility and help in sustaining momentum in the sector.”
Currently, different GST rates are applicable to various construction materials in the real estate sector. For instance, the GST rate is 28 percent on cement, 18 percent on steel, 28 percent on paint, and 18 percent on tiles and sanitary ware. These high rates directly affect the total cost of the project and, consequently, the housing price.
Prime Minister Narendra Modi, in his 79th Independence Day address on August 15, announced that the government would roll out next-generation reforms to the GST by Diwali, including a major reduction in tax rates. This announcement has been welcomed by the real estate industry, which is hopeful that these reforms will provide the necessary impetus to the sector.
The uncertainty around global trade policies has also slowed down decision-making, with many manufacturers and investors deferring large commitments until there is greater clarity. In this context, lowering the tax burden on construction inputs can provide a significant boost and a cushion for developers and investors against volatility, helping to sustain momentum in the sector.
Overall, the proposed 2-slab GST system is expected to streamline the tax structure, reduce costs for developers, and ultimately make homes more affordable for homebuyers. This move could be a game-changer for the real estate industry, providing a much-needed boost in a period of economic uncertainty.
Frequently Asked Questions
What are the proposed GST slabs for construction materials?
The proposed GST slabs for construction materials are 5 percent and 18 percent.
How will the 2-slab GST system benefit homebuyers?
The 2-slab GST system will reduce the overall cost of construction, leading to cheaper home prices for buyers.
What are the current GST rates on construction materials?
Currently, the GST rates on construction materials are 28 percent on cement, 18 percent on steel, 28 percent on paint, and 18 percent on tiles and sanitary ware.
How will the GST reform impact the commercial property segment?
A GST rate cut could provide a much-needed respite for commercial property developers, especially in the face of looming tariffs on Indian exports.
What did Prime Minister Narendra Modi announce about GST reforms?
Prime Minister Narendra Modi announced that the government would roll out next-generation reforms to the GST by Diwali, including a major reduction in tax rates.
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