GST Rate Cut on Cement and Materials to Lower Home Prices and Boost Housing Demand
The real estate sector has hailed the 56th GST Council meeting's decision to rationalise tax rates on key construction inputs as a landmark reform that could transform housing affordability and spur demand during the festive season.
GstReal EstateAffordable HousingTax ReductionHousing DemandReal EstateSep 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 finalise 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 rationalisation 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 reduction for cement?
The GST rate for cement has been reduced from 28% to 18%.
How will the GST rate reduction affect home prices?
The reduction in GST rates on key construction materials like cement and granite blocks is expected to lower home prices, making them more affordable for consumers.
Why is this decision important for the real estate sector?
This decision is crucial as it reduces input costs for developers, improves project viability, and accelerates housing delivery, particularly in the affordable and mid-income segments.
What is the expected impact on housing demand during the festive season?
The reduction in GST rates is expected to boost housing demand during the festive season, as homebuyers are more likely to finalize purchases due to lower prices and improved affordability.
How will this reform affect the broader economy?
The reform is expected to have a ripple effect across the economy, accelerating infrastructure projects and creating a multiplier effect on GDP growth.
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