CREDAI Pledges to Pass GST Savings to Homebuyers, Aiding Affordable Housing
CREDAI, the Confederation of Real Estate Developers' Associations of India, has committed to passing on the savings from recent GST rate cuts on construction materials to homebuyers. This move is expected to reduce property costs, especially in smaller cities.
Real EstateGstHomebuyersConstruction MaterialsAffordable HousingReal EstateSep 12, 2025
Boman Irani, the chairman of CREDAI, stated, “We are still evaluating how much of the cost benefit can be passed on. But, we will pass it to the buyers, so if the end price is less, then the GST will be less, and the stamp duty will be less.” He emphasized that the extent of any reduction in property prices will depend on the actual decrease in construction input costs, such as steel and cement, and how quickly these savings are reflected in the supply chain.
CREDAI operates on a volume-driven business model, focusing on maximum efficiency to pass on as many benefits as possible to the end buyers. However, Irani acknowledged that high stamp duty remains a significant challenge, adding a substantial burden to homebuyers even when other costs are reduced. “This is an area that needs serious consideration from state governments,” he added.
The Indian government recently revised the GST on certain construction materials, including cement, steel, tiles, and other finishing components, to help lower costs in the real estate sector. This move is part of a broader effort to stimulate housing demand and make homes more affordable amid rising inflation and supply-side pressures. The GST cut is aimed at easing input costs for developers, who often cite materials and finishing work as major cost drivers.
Boman Irani noted that the impact of GST and cost reductions will likely vary across regions. “Any segment that might benefit is tier-2 and tier-3 cities, where construction costs are higher than land costs; there, the impact may be more pronounced. However, in metro cities like Mumbai, where land costs are substantially higher than construction costs, the impact will be lesser,” he explained.
Shekhar Patel, president of CREDAI, provided an example to illustrate the potential savings. “If the GST on cement is cut by 10%, and a bag of cement currently costs ₹350, then the price should drop by about ₹30. We have to see how much of this reduction actually translates into savings in the construction sector,” he said.
Inflation plays a crucial role in shaping real estate investments. Boman Irani explained, “All costs are tied to inflation, and real estate remains the only true hedge against it. For example, if you buy a home today for ₹40 lakh, then with natural inflation of about 7–10% annually, the property’s value should ideally grow in line with that rate. By investing earlier, you not only protect yourself against inflation but also benefit from the compounding effect and additional profits as prices rise year after year.”
This inflation-adjusted growth makes real estate a unique long-term wealth builder compared to other asset classes. “While inflation erodes the value of money kept idle, owning real estate ensures your asset keeps pace with or even outpaces inflation, making it a stable hedge and a strong generator of value over time,” Irani noted.
Shekhar Patel observed that the GST announcements have sparked a strong sense of optimism in the market, giving buyers the impression that “something positive is happening.” “We have seen a substantial rise in buyer inquiries, and demand has particularly strengthened in the mid-segment housing category, typically in the ₹1–4 crore range,” he explained.
The commitment from CREDAI to pass on the savings from GST cuts to homebuyers is a positive step towards making housing more affordable and accessible, especially in smaller cities. This move is expected to boost the real estate market and provide relief to potential homebuyers facing rising costs.
Frequently Asked Questions
What is CREDAI's commitment regarding GST savings?
CREDAI has committed to passing on the savings from recent GST rate cuts on construction materials to homebuyers, which is expected to reduce property costs, especially in smaller cities.
What are the key construction materials that received GST cuts?
The key construction materials that received GST cuts include cement, steel, tiles, and other finishing components.
How will the GST cuts impact property prices in different regions?
The impact will likely be more pronounced in tier-2 and tier-3 cities where construction costs are higher than land costs. In metro cities like Mumbai, where land costs are significantly higher, the impact will be lesser.
What role does inflation play in real estate investments?
Inflation plays a crucial role in real estate investments as it helps protect the value of the investment. Real estate is considered a hedge against inflation, ensuring that the asset grows in line with or outpaces inflation over time.
What has been the market response to the GST cuts?
The GST cuts have sparked a strong sense of optimism in the market, leading to a substantial rise in buyer inquiries, particularly in the mid-segment housing category.
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