GST Rate Rationalisation Boosts Real Estate Sector, Promising Strong Festive Demand
The 56th GST Council meeting has approved key reforms to reduce tax rates on essential construction materials, leading to cost savings for developers and increased affordability for homebuyers, especially during the festive season.
GstReal EstateConstructionTax ReformHousing DemandReal Estate NewsSep 04, 2025
Among the various sectors, real estate has emerged as one of the primary beneficiaries of the new GST rate rationalisation. The reduction of GST on construction inputs such as cement, marble, and granite is expected to translate into cost savings for developers and affordability gains for homebuyers. Industry stakeholders believe that this move could trigger a positive chain reaction in the housing sector, especially in the run-up to the festive season, which traditionally witnesses strong property demand.
The most notable revisions include the reduction of GST on cement and marble from 28% to 18%, and on granite blocks from 12% to 5%. As cement and stone-based products constitute a significant share of construction input costs, the reform is expected to ease the financial burden on developers and improve the pricing dynamics of housing projects. The reduction of these rates has been positioned as a major relief for the common man, given the direct linkage between input costs and the final price of housing units.
Real estate experts across the sector have welcomed the move, emphasizing its potential to spur housing demand and improve affordability. Mr. Pradeep Aggarwal, Founder & Chairman of Signature Global (India) Ltd, welcomed the announcement, stating, “We wholeheartedly welcome the GST Council’s move on rate rationalisation ahead of the festive season. By reducing the tax burden, this 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.” He added, “This reform gives a major push to the housing sector, making homeownership more accessible for a wider population.”
Industry watchers note that the festive season has historically been a period of high property registrations and launches. The reduction in tax rates, therefore, could directly translate into stronger buyer sentiment, allowing developers to bring projects to market at more competitive prices. Mr. Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, pointed to the broader tax landscape, saying, “The GST Council’s decision to approve the implementation of next-generation GST reforms 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 like cement and marble blocks, lowering the cost of constructing homes, ensuring easier compliance for developers, and improving overall affordability for homebuyers.”
Adding to this, Mr. Sumit Agarwal, Director of Ashtech Group, noted the dual benefits for both housing and infrastructure, stating, “The government’s move to reduce GST on cement, marble, and other key inputs will significantly reduce construction costs in both real estate and infrastructure. This is a significant step that is expected to not only ease the burden on developers but also stimulate demand and give a strong boost to the industry as a whole.”
The linkage between real estate and infrastructure is important since the two sectors share common supply chains. A drop in input costs can, therefore, ripple across highways, metro rail, and housing projects alike, creating wider economic momentum. Mr. Vikas Bhasin, Managing Director of Saya Group, however, pointed out that material costs form only part of the picture, noting, “We welcome the government’s decision on broad GST rate rationalization, which will benefit the public at large. The reduction of GST on cement is also a positive step and will help ease construction costs. However, it is important to note that construction materials account for only about 25–30% of the overall cost of real estate projects, and cement is just one of the many inputs. Therefore, the impact of this move on end prices will be limited.”
Analysts echo this assessment, cautioning that while GST cuts will provide relief, other cost drivers such as land acquisition, financing, and regulatory clearances continue to play a larger role in final housing prices. The overall affordability impact, therefore, will depend on how developers pass on savings. Mr. Deepak Kumar Jain, Founder and CEO of TaxManager.in, focused on the labour-driven nature of construction, stating, “Real estate, being one of the most labour-intensive sectors, is expected to gain significantly from the reduction of GST rates—from 28% to 18%—on key construction materials such as cement, tiles, and other inputs. This move will help lower overall construction costs to some extent. It is also expected that developers will pass on these benefits to homebuyers by reducing property prices, which have risen sharply over the past few years.”
The real estate sector contributes significantly to India’s GDP and employment generation, making it a critical focus area for fiscal and policy reforms. With construction activity heavily dependent on material costs, the revised GST slabs are expected to enhance project viability, accelerate execution timelines, and attract fresh investments in both affordable and mid-segment housing projects.
Moreover, the timing of the reform is considered strategic, aligning with the festive season when property transactions typically peak. Developers are expected to leverage the rate cuts to launch new projects, offer competitive pricing, and extend festive discounts to attract buyers. Industry experts believe that the reforms could also indirectly benefit allied industries such as cement manufacturing, logistics, and steel production by stimulating demand.
While stakeholders acknowledge that input costs form only a part of the overall project expenditure, the broader sentiment is that GST rationalisation will inject much-needed momentum into the sector. Over time, improved affordability and stronger housing demand could strengthen the sector’s contribution to economic growth, while ensuring the government’s long-term goal of expanding homeownership remains on track.
Frequently Asked Questions
What are the key changes in GST rates for the real estate sector?
The key changes include reducing the GST on cement and marble from 28% to 18%, and on granite blocks from 12% to 5%. These reductions are expected to lower construction costs and improve affordability for homebuyers.
How will the GST rate rationalisation impact home prices?
The reduction in GST on construction materials like cement and marble is expected to lower overall construction costs, which could translate into more affordable home prices for consumers.
What is the significance of these reforms during the festive season?
The festive season is traditionally a period of high property demand. The GST rate cuts are expected to boost buyer sentiment and allow developers to offer more competitive pricing and discounts, attracting more buyers.
How do industry experts view the impact of these reforms?
Industry experts generally view the reforms positively, noting that they will reduce construction costs, improve affordability, and stimulate demand in the real estate sector.
What are the broader implications of these reforms for the economy?
The reforms are expected to enhance project viability, attract fresh investments, and stimulate demand in allied industries such as cement manufacturing, logistics, and steel production, contributing to overall economic growth.
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