GST Rate Changes 2025: How Will They Impact Your Dream Home and Real Estate Investments?
The central government's decision to reduce GST on construction materials like cement and granite is expected to lower costs and increase profitability for real estate developers, ultimately making homes more affordable for buyers.
GstReal EstateAffordable HousingConstruction CostsHomebuyersReal EstateSep 04, 2025
The GST Council, in its latest meeting, announced that GST on cement has been cut from 28% to 18%, while granite blocks will now be taxed at just 5% instead of 12%. These reductions, effective from September 22, 2025, are expected to bring down construction costs significantly and improve project viability across the housing and retail real estate markets.
Big Relief for Homebuyers
For homebuyers, particularly those looking at affordable housing, this reform brings direct benefits. Lower input costs mean developers can pass on savings to customers, reducing overall property prices. Pradeep Aggarwal, Founder and Chairman of Signature Global (India) Ltd., called the move a major relief for the common man.
“We wholeheartedly welcome the GST Council’s move on rate rationalisation ahead of the festive season. By reducing the tax burden, the move comes as a major relief for the common man. The housing sector, particularly, stands to benefit as it will ultimately reduce home prices for consumers and create sustainable demand across segments,” he said. He further added that the simplified two-tier GST structure will increase transparency and improve compliance for developers, which in turn will help supply quality homes at competitive prices.
Boost to Developers and Investors
For real estate developers and investors, the reduced GST on cement, marble, and other inputs means lower costs and healthier profit margins. This reform is expected to encourage faster project delivery, attractive pricing, and stronger buyer confidence. Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, said, “The GST Council’s decision is a crucial step towards simplifying India’s tax structure and boosting economic growth. For real estate, these reforms are particularly significant as they will directly benefit from reduced taxes on raw materials, lowering the cost of constructing homes, ensuring easier compliance for developers, and improving overall affordability for homebuyers.”
He predicted that the upcoming festive season will see a jump in housing demand, as developers will be in a better position to offer lucrative deals to buyers.
Affordable Housing Gets a Push
The affordable housing segment has been under pressure in recent years. According to ANAROCK Research, the share of affordable homes (below ₹40 lakh) in total sales dropped from 38% in 2019 to just 18% in 2024, while new supply fell from 40% to just 12% in the first half of 2025. Anuj Puri, Chairman of ANAROCK Group, explained that the GST cut could help revive this segment. “Reduced GST on construction materials like cement can cut construction costs by as much as 3–5%. Developers, especially those creating affordable housing, will get major relief in terms of cash flows and margins. If these savings are passed on to homebuyers, it could significantly boost demand in the affordable housing segment.”
With India facing a shortage of nearly 1 crore budget homes in urban markets—expected to rise to 2.5 crore by 2030—this reform is seen as a timely step to make homeownership more accessible to middle-class families.
Impact on Commercial and Retail Real Estate
While residential real estate is the biggest beneficiary, commercial and retail real estate also stand to gain. Reduced construction costs will improve the viability of shopping malls, retail complexes, and office projects. Puri noted that retail developers, in particular, will benefit from lower input costs and supply chain efficiencies. “The reduced GST on building materials will result in lower input costs for developers and help speed up the supply of retail projects. This may result in more competitive rental rates, benefiting both businesses and consumers,” he said.
However, he cautioned that the elimination of Input Tax Credit (ITC) on commercial property leasing could increase operational costs for office spaces. The new Reverse Charge Mechanism (RCM), requiring tenants to pay GST directly on rentals from unregistered suppliers, will also add to compliance responsibilities.
Industry Sentiment Turns Positive
Across the board, real estate stakeholders believe these reforms will not only make homes more affordable but also attract institutional investment into the sector. With greater transparency, easier compliance, and lower administrative hurdles, developers can now focus more on delivering projects on time and ensuring customer satisfaction. Sumit Agarwal, Director of Ashtech Group, said: “The GST Council’s decision to rationalize tax rates is a welcome and much-needed reform. In particular, the move to reduce GST on cement and other inputs will significantly reduce construction costs in both real estate and infrastructure. This is expected to stimulate demand and give a strong boost to the industry as a whole.”
A Golden Opportunity for Buyers and Investors
With the festive season around the corner, the timing of these reforms is being seen as strategic. Lower home prices, attractive deals, and renewed buyer confidence are expected to fuel demand. Investors are also likely to see this as an opportunity to enter the market at a time when regulatory reforms are creating a more stable and transparent environment. In the words of Anuj Puri, “The simplified GST framework brings pricing clarity and improves overall consumer confidence. This clarity can potentially bring significant numbers of first-time buyers and fence-sitters to the market, especially in tier-II and tier-III cities.”
Industry experts believe the GST cut will not only reduce construction costs but also stimulate homebuyer sentiment and drive purchase decisions, creating momentum in the real estate and infrastructure sectors.
Frequently Asked Questions
What is the new GST rate for cement and granite blocks?
The new GST rate for cement has been reduced from 28% to 18%, while the GST rate for granite blocks has been reduced from 12% to 5%.
How will these GST rate reductions benefit homebuyers?
The reduced GST on construction materials like cement and granite will lower input costs for developers, which can result in lower overall property prices for homebuyers.
Will these reforms impact the affordable housing segment?
Yes, the reduced GST on construction materials is expected to cut costs by 3-5%, which can help revive the affordable housing segment and make homeownership more accessible to middle-class families.
How will commercial and retail real estate benefit from these changes?
Commercial and retail real estate will benefit from lower input costs, which can improve the viability of projects and result in more competitive rental rates.
What is the expected impact on the real estate industry during the festive season?
The timing of these reforms is strategic, as it is expected to fuel demand during the festive season with lower home prices, attractive deals, and renewed buyer confidence.
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