GST 2.0 Boost for Real Estate: Lower Rates on Cement and Construction Materials
The GST Council's decision to cut tax rates on cement and key construction materials is expected to reduce project costs for developers and homebuyers, benefiting the real estate sector.
Real EstateGstConstruction MaterialsProject CostsNaredco NationalReal Estate NewsSep 04, 2025
At its 56th meeting, the Council cut the GST on cement from 28 per cent to 18 per cent. Cement forms a significant share of construction costs, and the reduction is expected to ease financial pressure across residential and commercial projects.
The rate on marble and travertine blocks has been lowered from 12 per cent to 5 per cent, while granite blocks will also attract 5 per cent GST compared with 12 per cent earlier. Sand-lime bricks and stone inlay work will now be taxed at 5 per cent instead of 12 per cent.
Industry experts have welcomed the decision. Niranjan Hiranandani, Chairman of NAREDCO National, stated, “The GST rationalisation is a festive bonanza for Indian consumers and a strategic boost for the economy. By enhancing purchasing power, stimulating consumption, and helping contain inflation, this reform creates a multiplier effect that will propel India’s GDP growth beyond 8 per cent.”
Industry bodies said the measures would help moderate project costs at a time when demand in both mid-income and premium housing segments is expanding.
Shekhar Patel, President of CREDAI National, told ET, “The reduction in GST on cement and other key building materials is a much-needed relief for the real estate sector. It will support developers in managing costs better and can provide a cushion against price escalation for homebuyers. Overall, these changes will help in a 5 per cent saving in construction cost, and the same will be passed on to homebuyers in due course of time.”
The benefit of lower material costs is not expected to reflect immediately, as most developers are bound by ongoing contracts. Experts said the impact will start showing once current agreements end and new contracts are negotiated.
Developers are likely to pass on part of the benefit to buyers while also improving margins, after years of high input costs.
The Council, however, raised GST on certain government works contracts and subcontracting arrangements from 12 per cent to 18 per cent. This could push up costs for public projects, though cheaper cement, granite, marble, and bricks are expected to benefit private housing.
The decision comes at a time of strong housing demand in major urban centres, with record sales and registrations in 2025. Lower input costs could encourage developers to accelerate launches, while buyers may see greater affordability and choice.
By easing the tax burden on core materials, the GST Council has provided support to the housing sector, which is central to economic growth and urban development.
Frequently Asked Questions
What is the new GST rate on cement?
The new GST rate on cement has been reduced from 28 per cent to 18 per cent.
How will the reduction in GST on construction materials benefit developers?
The reduction in GST on construction materials will help developers manage costs better and can provide a cushion against price escalation for homebuyers, potentially leading to a 5 per cent saving in construction costs.
What other construction materials have seen a reduction in GST?
The GST on marble and travertine blocks has been reduced from 12 per cent to 5 per cent, and the same applies to granite blocks. Sand-lime bricks and stone inlay work will now be taxed at 5 per cent instead of 12 per cent.
How will the changes affect ongoing contracts?
The benefit of lower material costs is not expected to reflect immediately, as most developers are bound by ongoing contracts. The impact will start showing once current agreements end and new contracts are negotiated.
What is the impact of the higher GST on government works contracts?
The GST on certain government works contracts and subcontracting arrangements has been raised from 12 per cent to 18 per cent, which could push up costs for public projects.
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