GST Reduction Fuels Housing Demand, Enhances Festive Season Sales: Credai
The Indian government's decision to cut GST rates on various products is expected to boost demand for residential properties during the festive season, according to Credai. The reduction in construction costs and positive consumer sentiment are key factors.
Gst ReductionHousing DemandReal EstateCredaiFestive SeasonReal Estate NewsSep 12, 2025
The association, which has 13,000 members from across India, stated that the construction cost is expected to come down due to the reduction in GST rates on cement and other building materials. Credai is currently organizing its annual event, Credai-NATCON, where these issues are being discussed.
Credai Chairman Boman Irani addressed a press conference on Thursday, saying, “GST rationalisation has generated a feel-good factor among people. There is a positive sentiment among consumers, which is a good sign ahead of the festival season.” The new GST rates became applicable from September 22.
Credai President Shekhar Patel emphasized that the reduction in GST rates, coupled with tax incentives in Budget 2025 and the reduction in repo rates by the RBI, would significantly boost housing demand. He noted that while housing sales in the first six months of 2025 rose in value terms, there was a decline in the number of units sold.
Patel, however, expressed optimism, stating that the strong economic growth in the June quarter of this fiscal year and other policy initiatives would enhance housing demand in the coming months. He reiterated the industry’s long-standing demand that the price cap of Rs 45 lakh in the definition of affordable housing should be raised to align with market realities.
Currently, the GST on affordable housing is only 1 per cent, while properties above Rs 45 lakh attract 5 per cent GST. Patel also pointed out that there is a total of 35-45 per cent taxes on the real estate sector from both the central and state governments. He argued that reducing these taxes would lower the selling price of properties.
More than 1,000 members from different states in India are attending this conference, making it a significant platform for discussing the future of the real estate industry and addressing the challenges faced by the sector.
Frequently Asked Questions
What is the impact of the GST reduction on the real estate sector?
The GST reduction on various products, including building materials, is expected to lower construction costs, increase consumer purchasing power, and boost demand for residential properties, especially during the festive season.
How does the reduction in GST rates affect housing sales?
The reduction in GST rates, combined with tax incentives and lower repo rates, is expected to significantly boost housing demand and sales, particularly in value terms.
What is Credai's stance on the current price cap for affordable housing?
Credai is advocating for an increase in the price cap for affordable housing, currently set at Rs 45 lakh, to better align with market realities and make more properties eligible for the 1 per cent GST rate.
How much tax burden does the real estate sector currently face?
The real estate sector faces a total tax burden of 35-45 per cent from both the central and state governments. Credai is calling for a reduction in these taxes to lower property prices and enhance affordability.
What is the significance of Credai-NATCON?
Credai-NATCON is an annual event organized by Credai, bringing together over 1,000 members from different states in India. It serves as a platform to discuss the future of the real estate industry and address key challenges and opportunities.
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