GST Cuts Boost Real Estate: Construction Costs to Drop by 7%

Union Home Minister and Minister of Cooperation, Amit Shah, addressed CREDAI’s national conference “Viksit Bharat @ 2047” in New Delhi, emphasizing the substantial benefits the real estate sector has gained from recent GST reforms. These reforms aim to reduce housing and building material costs, ultimately bringing down housing prices.

Shah detailed the specific GST reductions, including a drop from 8% to 1% for affordable housing, from 12% to 5% for housing projects, from 28% to 18% for cement, and from 12% to 5% for marble, granite, sand, lime, and bricks. Additionally, the GST on bamboo flooring has been reduced from 12% to 5%. According to Shah, these changes are expected to reduce the overall cost of building construction by 5-7%.

To further boost the sector, the government has allowed 100% FDI in construction projects through the automatic route and has released a ₹60,000 crore National Urban Housing Fund. Shah also highlighted the Prime Minister Narendra Modi’s vision of transforming India into a leading global economy by 2047, with a $5 trillion economic benchmark.

Over the past 11 years, the Modi government has made significant strides in infrastructure development, including the National Infrastructure Pipeline. This initiative has created a structured roadmap for urban development, aligning India with nations that boast the world’s best infrastructure.

Shah praised CREDAI for its 25 years of consistent efforts in promoting housing and habitat development, emphasizing the organization’s role in establishing ethical practices and structuring the real estate sector. CREDAI, present in 230 cities across 21 states, represents nearly 13,000 developers and has trained over 3 lakh workers.

Shah noted that urbanization in India is expected to reach 40% by 2035 and 50% by 2047. The responsibility for providing housing will largely fall on developers, and CREDAI should focus on promoting affordable, eco-friendly housing with a better standard of living. He also highlighted the importance of single-window clearances, time-bound approvals, online tracking, and digitized records in building trust within the sector.

The Real Estate (Regulation and Development) Act (RERA) has been a significant structural reform, adopted by 35 states and union territories. Appellate authorities have been established in 29 states, and 29 RERA authorities have launched their websites. Over 1.55 lakh real estate projects are registered under RERA, and nearly 1.10 lakh developers are part of its framework.

Shah emphasized the government’s commitment to the real estate sector and urged CREDAI to adopt green building norms, energy-efficient designs, water recycling, rainwater harvesting systems, and scientific waste management as the new standard in housing. Through these efforts, Prime Minister Modi’s vision of providing every person with a home can be realized.