GST Rate Cut on Cement and Construction Materials to Boost Housing Affordability and Demand
The real estate sector has welcomed the 56th GST Council meeting's decision to rationalize tax rates on key construction inputs, which is expected to lower home prices and boost demand, especially during the festive season.
GstHousingReal EstateCementGraniteReal Estate NewsSep 04, 2025
By lowering GST on cement from 28% to 18% and on granite blocks from 12% to 5%, the move is expected to ease input costs for developers, improve project viability, and accelerate housing delivery, particularly in the affordable and mid-income segments. Developers say the decision comes at a critical time when festive sales traditionally account for a large share of housing demand. With homebuyers already returning to the market after two years of price escalation, the reduction in taxation is expected to provide much-needed relief and encourage fence-sitters to finalize purchases.
Analysts believe the reform will also give developers more flexibility in pricing, enabling them to pass on benefits to consumers while maintaining margins. “We wholeheartedly welcome the GST Council’s move on rate rationalisation ahead of the festive season,” said Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd. “By reducing the tax burden, the move comes as a major relief for the common man. The housing sector, particularly, stands to benefit from GST reduction on input materials like cement from 28% to 18% and granite blocks from 12% to 5%, as this will ultimately reduce home prices for consumers and create sustainable demand across segments.
This reform gives a major push to the housing sector, making homeownership more accessible for a wider population.” Neeraj K Mishra, Executive Director, Ganga Realty, termed the step “historic and highly progressive,” noting that high taxation on cement and steel was long a bottleneck for affordable housing. “This reduction will lower construction costs, revive demand, speed up project completions, and take us closer to the dream of ‘Housing for All,’” he added.
Others highlighted its timing. Akash Kohli, Founder & CEO of Elante Group, said, “The GST rate cut is truly a Diwali gift for the real estate sector. A 10% reduction will significantly lower construction costs, enabling us to pass on nearly 60% of the savings to homebuyers. This festive boost will enhance affordability and brighten housing dreams for many families.”
Beyond real estate, industry bodies expect a ripple effect across the economy. Niranjan Hiranandani, Chairman, Hiranandani and NAREDCO National, called the reform a “festive bonanza for Indian consumers and a strategic boost for the economy.” He said rationalization of GST on construction materials will not only strengthen housing but also accelerate infrastructure projects, creating a multiplier effect on GDP growth. With input costs easing, developers expect improved project viability, faster delivery, and renewed housing demand across markets. For homebuyers, the reform offers renewed hope of affordable prices and greater supply at a time when festive sentiment is at its peak.
Frequently Asked Questions
What is the GST rate cut on cement?
The GST rate on cement has been reduced from 28% to 18%.
How will the GST rate cut benefit homebuyers?
The reduction in GST rates on construction materials like cement and granite blocks will lower construction costs, leading to more affordable home prices for buyers.
Why is the timing of this GST rate cut significant?
The timing is significant because it coincides with the festive season, when housing demand typically increases. This reduction will provide a boost to the real estate market and encourage more home purchases.
How will this affect the real estate sector?
The GST rate cut will improve project viability for developers, speed up project completions, and increase the supply of affordable housing, ultimately boosting the overall real estate sector.
What is the expected impact on the economy?
The reduction in GST rates on construction materials is expected to have a positive ripple effect on the economy by strengthening the housing sector and accelerating infrastructure projects, which can contribute to GDP growth.
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