GST Rate Cuts on Construction Materials to Boost Housing Market, Especially Mid-Income Segment
BPTP CEO Manik Malik anticipates improved affordability and buyer confidence, especially in the mid-income segment, following recent GST rate cuts on cement and construction materials.
Gst CutsHousing MarketMidincome SegmentConstruction MaterialsReal EstateReal Estate NewsSep 11, 2025
Malik believes the reforms will enhance project viability, spur new launches, and strengthen sentiment in key markets like NCR. Edited Excerpts –
Q) What kind of impact do you see post-GST rate rationalisation as the council cuts rates on cement and material?
A) The GST rate rationalisation is a timely and progressive move that will energize the real estate sector—especially in high-demand regions like the NCR. While developers may see limited direct cost reduction in the immediate term, the larger and more lasting impact is on buyer sentiment and market liquidity. With improved purchasing power and greater affordability, we expect stronger demand across segments. At BPTP, we view this as a structural boost to housing activity—encouraging new launches, enabling faster execution, and improving confidence across the ecosystem.
Q) How quickly are developers likely to reflect these cost savings in pricing for homebuyers—especially in ongoing projects still under older contracts?
A) The reflection of cost savings will differ project to project. For ongoing developments where procurement contracts were finalized earlier, the impact may be minimal in the short term. Additionally, larger developers, including BPTP, typically engage general contractors under fixed pricing arrangements, especially for bulk materials like cement—so the immediate benefit is not always directly realized. However, in upcoming project phases and fresh tenders, developers will reassess cost models to align with the new tax structure. Over the next few quarters, this may support more competitive offerings, improved affordability, and timely execution.
Q) With GST on cement cut from 28% to 18%, and on materials like marble, granite, and bricks reduced from 12% to 5%, how much can average construction costs realistically drop?
A) Construction cost reduction will depend heavily on the contracting framework. For developers procuring materials directly, cost reductions could range from 3% to 5%. For those working under lump-sum or EPC contracts—as is common in large-scale projects—the effect may be more indirect or gradual. Overall, we expect tangible efficiencies over time, particularly in mid-income and plotted formats, where material share is higher.
Q) Which housing segments are likely to benefit the most?
A) The most immediate benefit will likely be felt in the middle-income segment where affordability and cost sensitivity are key drivers. In these segments, even marginal reductions in tax incidence can improve feasibility and buyer accessibility. Premium and luxury segments may see indirect benefit through improved market confidence and liquidity, but the material cost share tends to be lower relative to overall project budgets.
Q) When will the new GST rates realistically start reflecting in new tender negotiations and developer cost models?
A) The implementation will be phased. For developers currently operating under fixed-rate contracts with suppliers or contractors, the adjustment will begin with the next procurement cycle. In most cases, this means new tenders floated over the next 2–3 quarters will begin to reflect the revised GST rates. At BPTP, internal teams have already begun evaluating sourcing strategies and pricing assumptions for upcoming launches in light of this reform.
Q) Could these rate cuts invigorate new project launches and accelerate housing supply in key urban markets?
A) Yes, we believe the revised GST regime will significantly improve project viability and create a stronger foundation for new launches—especially in urban and peri-urban markets where affordability is critical. Lower tax incidence on materials will improve working capital efficiency and reduce break-even thresholds. This, coupled with more favourable buyer sentiment, will encourage developers to bring forward inventory and scale up housing supply in key corridors like Gurugram, Faridabad, and Noida.
Frequently Asked Questions
What is the impact of GST rate cuts on the real estate sector?
GST rate cuts on cement and construction materials are expected to energize the real estate sector, especially in high-demand regions like NCR, by improving buyer sentiment and market liquidity.
How will these cuts affect the mid-income housing segment?
The mid-income segment is likely to benefit the most, as even marginal reductions in tax incidence can improve affordability and buyer accessibility.
When will the cost savings be reflected in new projects?
The cost savings will be reflected in new projects over the next 2-3 quarters as new tenders and procurement cycles align with the revised GST rates.
How will these changes affect project viability?
The revised GST regime will improve project viability by reducing tax incidence on materials, improving working capital efficiency, and reducing break-even thresholds.
What are the expected benefits for developers?
Developers can expect more competitive offerings, improved affordability, and timely execution, which will encourage new project launches and scale up housing supply in key urban markets.
Related News Articles
Justo Realfintech Expands Footprint in Pune and Thane with Mega Mandate
Real estate services startup Justo Realfintech secures developer mandates worth over Rs 1400 crore in Pune and Thane
IIM Bangalore's Real Estate Research Initiative Partners with Bangalore Apartments Federation
Indian Institute of Management Bangalore's Real Estate Research Initiative has signed a Memorandum of Understanding (MOU) with Bangalore Apartments Federation to promote research and knowledge sharing in the real estate sector.
Kanakapura Road: The Hub of Real Estate Growth in Bangalore
Kanakapura Road is emerging as a hotspot for real estate investors, driven by its renowned educational institutions, thriving industrial areas, and upgraded infrastructure.
Arvind SmartSpaces Eyes Massive Expansion with ₹2,300-2,500 Crore Worth of New Projects in FY25
The Ahmedabad-based real estate firm plans to launch multiple projects in Bengaluru and Ahmedabad, with a focus on sustenance sales and private placements.
Gurugram Tops Luxury Housing Sales in NCR with 10,365 Units Sold in H1 2024
Gurugram has emerged as the leader in luxury housing sales in the National Capital Region (NCR) with over 10,365 units sold in the first half of 2024, according to a report by ANAROCK. The city has seen a significant surge in demand for luxury homes, with
Maharashtra Ranks 2nd in Cumulative Rooftop Solar Installations Nationally
Maharashtra has secured the second position in cumulative rooftop solar installations nationally, according to a report by Mercom India. The state has installed a total of 508.6 MW of rooftop solar capacity as of March 2024.