GST 2.0: A Game-Changer for the Indian Real Estate Sector
GST 2.0, with its simplified two-slab structure and reduced rates on key construction materials, is set to revolutionize the Indian real estate sector. Experts from leading real estate companies share their insights on the implications and benefits of this reform.
Gst 20Real EstateAffordable HousingConstructionTax ReformReal Estate NewsSep 04, 2025
GST 2.0 is not just an incremental reform but a structural reset for Indian real estate. The shift to a broad two-slab structure of 5% and 18%, along with a 40% demerit rate, signals the government’s intent to simplify and strengthen an eight-year-old tax regime. For our sector, the rationalisation of rates on key construction materials like cement and steel from 28% to 18%, and granite blocks and sand-lime bricks from 12% to 5%, directly translates into lower project costs and more affordable homes.
According to Ashish Kukreja, CEO and Founder of Homesfy.in and mymagnet.io, “GST 2.0 is a significant step forward for the real estate sector. It not only reduces the financial burden on developers but also makes homes more affordable for buyers. Real estate already employs over 7 crore Indians, making it the country’s second-largest employer. These reforms will encourage developers to launch more projects, creating new jobs and improving buyer sentiment.”
Real estate is a critical sector in India, employing millions and driving economic growth. The rationalisation of GST rates on essential construction materials will have a cascading effect, reducing costs and improving project viability. Aniruddha Mehta, Chairman & Managing Director of Umiya Buildcon Ltd, adds, “The rationalisation of GST under the proposed reforms marks a landmark moment for the real estate and construction industry. Simplifying tax slabs on key inputs like cement, steel, and paints will reduce pricing inefficiencies, improve procurement processes, and ease cash flow challenges — all of which are crucial for sustainable project execution.”
Beyond cost savings, GST 2.0 has the potential to catalyse growth and job creation across the broader ecosystem. As one of the country’s largest employment generators, real estate stands to benefit from improved liquidity and reinvestment opportunities, leading to more jobs in construction, allied industries, and services. “Even a modest reduction in input costs can significantly enhance project viability and timelines, particularly in affordable and mid-income housing where pricing sensitivity is high,” Mehta explains.
Moreover, a simplified and transparent tax regime instills greater confidence among both homebuyers and long-term investors. It can drive capital inflows, support sustainable building practices, and ultimately contribute to India’s housing and infrastructure goals. “There will naturally be transitional issues in adapting to the new framework, but the overall direction is positive. GST 2.0 gives buyers affordability, developers confidence, and the sector a foundation of trust, and that combination is vital for the next phase of growth in Indian housing,” Kukreja emphasizes.
Clarity on transitional provisions and tax credit flow will be essential to ensure a smooth shift and protect near-term working capital cycles. The government’s commitment to these reforms is a strong signal that it is prioritizing the needs of the real estate sector, which is crucial for the country’s economic development. “A simpler, more transparent GST framework can help resolve long-standing challenges around input tax credits and compliance, while also attracting institutional capital into emerging segments such as affordable housing, co-living, and rental housing,” Mehta concludes.
In summary, GST 2.0 is poised to bring about significant changes in the Indian real estate sector, making it more efficient, transparent, and competitive. The benefits of lower costs, increased employment, and enhanced investor confidence are expected to drive the sector into a new era of growth and development.
Frequently Asked Questions
What are the key changes in GST 2.0 for the real estate sector?
GST 2.0 introduces a broad two-slab structure of 5% and 18%, with a 40% demerit rate. Key construction materials like cement and steel have been rationalised from 28% to 18%, and granite blocks and sand-lime bricks from 12% to 5%.
How will these changes benefit developers?
The rationalisation of GST rates on key construction materials will reduce project costs, improve liquidity, and enhance project viability. This will encourage developers to launch more projects and create jobs.
What impact will GST 2.0 have on homebuyers?
GST 2.0 will make homes more affordable for buyers due to lower project costs. It will also instill greater confidence among homebuyers, leading to improved buyer sentiment.
How does GST 2.0 affect employment in the real estate sector?
Real estate is one of the largest employment generators in India. GST 2.0 will create more jobs in construction, allied industries, and services, contributing to economic growth.
What are the potential challenges in implementing GST 2.0?
There may be transitional issues in adapting to the new tax framework, particularly around input tax credits and compliance. Clarity on transitional provisions and tax credit flow will be essential to ensure a smooth shift.
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