GST Reforms Boost Real Estate Affordability and Growth in Maharashtra

The GST Council's recent reforms, effective from September 22, 2025, have significantly reduced GST rates on key construction materials, paving the way for more affordable and robust real estate growth in Maharashtra.

Gst ReformReal EstateAffordable HousingConstruction CostsMaharashtraReal Estate MaharashtraSep 04, 2025

GST Reforms Boost Real Estate Affordability and Growth in Maharashtra

Real Estate Maharashtra:Pune/Mumbai, 4th September 2025: In a landmark decision at its 56th meeting held on September 3, 2025, the GST Council has unveiled sweeping reforms designed to simplify tax structures and substantially reduce costs across the real estate sector. At the heart of this transformation lies the dramatic cut in GST rates on critical construction inputs—from cement to marble—delivering a direct and powerful boon to developers and homebuyers alike.

Key Changes in GST Structure
Cement GST reduced from 28% to 18%, a move expected to significantly lower construction costs, particularly in the real estate and infrastructure sectors.
GST on marble, travertine, granite blocks, and sand-lime bricks cut from 12% to 5%, making finishing and structural materials more accessible.
The GST regime has been simplified from four rate slabs to two—5% and 18%, streamlining taxation across numerous goods and boosting ease of compliance.

With construction costs projected to drop by anywhere from 3 to 5 percent—and possibly even up to 10 percent in some cases—builders are poised to pass on savings to buyers, especially in affordable and mid-income housing segments. Already, the prospect of lower home prices is generating buzz: some estimates suggest property prices may fall as much as 5 percent as a result.

The timing of these cuts couldn’t be more strategic. Rolling out ahead of the festive season, the move is expected to boost sentiment and spur demand as buyers await more accessible pricing.

While the benefits seem clear, industry watchers note that the real impact rests on whether developers translate input cost reductions into consumer savings—or retain them to protect their margins. Still, many market observers expect that competitive pressures and heightened consumer awareness will encourage price pass-through.

Prashant Sharma, President, NAREDCO Maharashtra said, “NAREDCO Maharashtra welcomes the GST slab rationalization rolled out effective September 22, 2025. Bringing essential construction materials—particularly cement—from 28% down to 18%, and materials like granite and sand-lime bricks to 5%, delivers significant cost relief across the construction value chain. This reduction eases input costs, improves project feasibility, and allows developers to pass savings on to homebuyers—especially in the affordable housing segment. Announced during the festive season, this move not only uplifts consumer sentiment but also aligns with the Government’s ‘Housing for All’ mission.”

Manish Jain, President, CREDAI Pune, said, “At CREDAI Pune, we have long advocated for the reduction of the 28% GST on cement, which constitutes around a large portion of construction costs. After years of persistent efforts, we appreciate the Government’s decision to lower it to 18%, which should reduce input costs by approximately 2-3%, provided the cement and RMC companies pass on this benefit to us, immediately to the sector.”

This relief is especially critical given that material costs have surged 40-50% since COVID-19, severely impacting project feasibility.

The 56th GST Council’s reforms mark a pivotal advancement for real estate. Beyond cement, reduced GST rates on granite, marble, bricks, wood products, and renewable energy devices will support affordability and sustainability across luxury and affordable housing. The reduction of GST on these products from 12–18% will put more money in the hands of buyers and help them fulfill their dream of affordable housing in Pune. Coupled with lower interest rates, this move will further boost growth in the real estate sector.

The operationalization of the GST Appellate Tribunal and expedited refunds will enhance liquidity, enable faster dispute resolution, and provide greater certainty for developers.

These measures offer a forward-looking framework that promotes transparency, cost-efficiency, and ultimately benefits homebuyers with more competitive pricing. CREDAI Pune applauds this decisive step toward a more robust, growth-oriented, and sustainable real estate sector.

This balanced reform aligns with the industry’s call for relief amid rising costs and paves the way for renewed confidence and market stability in Pune and beyond.

Rohit Gera, Managing Director, Gera Developments, said, “The government’s move to cut GST rates and remove two slabs is a bold and strong step—not just small tinkering with the system. By making taxes simpler and fairer, it gives relief to businesses and consumers. Coming just before the festive season, it is a real bonanza that will put more money in people’s hands, boost spending, and help the economy grow faster. For real estate, this means homes become more affordable, which will give a big push to buyer confidence and housing sales.”

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory said, “The shift to a two-slab GST regime (5% and 18%) coupled with the reduction on key inputs is a welcome structural reform. Simplified taxation not only streamlines compliance but enables faster project execution. For buyers, this could translate into more accessible pricing and improved transparency. The timing is strategic—just ahead of the festival season—setting the stage for renewed buyer interest and a healthier real estate cycle.”

Vikas Jain, CEO, Labdhi Lifestyle & President, NAREDCO Maharashtra NextGen said, “The GST rationalization is a landmark move by the Government. The reduction in GST on construction materials will help ease the cost pressures on developers, especially in affordable and mid-segment housing. Simplifying tax slabs also brings much-needed clarity and predictability—essential for innovation in design, sustainable developments, and faster deliveries. If suppliers pass on these savings, homebuyers stand to benefit considerably.”

Parag M Munot, MD, Kalpataru Ltd., said, “GST 2.0 is a welcome step towards rationalization and greater clarity on the tax structure. What excites us more are the policy amendments around faster GST registration, refunds, and clarity on discount adjustments — these ease compliance issues down the value chain, especially benefiting our contractors, suppliers, and partners. A smoother operational ecosystem ultimately supports timely delivery and better customer experience in the housing segment.”

For luxury housing, the works contract tax structure remains unchanged, so there is no additional cost implication for premium projects — which ensures stability for both developers and discerning homebuyers. The real impact we see is indirect: reduced rates on critical construction materials such as cement and bricks can lower procurement costs across the supply chain. In sum, GST 2.0 reinforces predictability while keeping the luxury real estate space insulated from sharp tax volatility.

Navin Makhija, Managing Director, The Wadhwa Group said, “The GST reform is not just a tax tweak—it’s a strategic stimulus for the entire economy. Lower GST on cement and other finishing materials will help reduce construction costs, enabling developers to pass on the benefits to homebuyers. Reduction of GST on almost 80% of the products will leave a greater spending power in the hands of consumers, their ability to buy and borrow improves, which will naturally fuel housing demand and the economy in general. This reform is well-timed to boost sentiment and drive deeper housing penetration across emerging micro-markets.”

Shraddha Kedia-Agarwal, Director, Transcon Developers said, “This rationalization of GST is a milestone decision that eases cost burdens for developers and promises relief for homebuyers. With construction costs shrinking, there’s scope to reimagine offerings—perhaps through more thoughtfully priced units or upgraded amenities that maintain affordability. Crucially, the simplification assures buyers about transparency in overall tax burdens, which can restore trust and strengthen market sentiment.”

In effect, the reform represents a multi-pronged catalyst: trimming costs, boosting affordability, simplifying taxation, and reviving housing demand with an aim to meet the government’s “Housing for All” aspirations.

Frequently Asked Questions

What are the key changes in the GST structure for real estate?

The key changes include reducing the GST on cement from 28% to 18%, and on marble, travertine, granite blocks, and sand-lime bricks from 12% to 5%. The GST regime has been simplified from four rate slabs to two—5% and 18%.

How will these changes affect homebuyers?

The changes are expected to reduce construction costs by 3-5%, and possibly up to 10% in some cases. This could lead to a 5% reduction in property prices, making homes more affordable for buyers.

Why is the timing of these reforms strategic?

The reforms are timed to roll out ahead of the festive season, which is expected to boost consumer sentiment and spur demand as buyers anticipate more accessible pricing.

What are the industry's expectations from these reforms?

Industry experts expect that competitive pressures and heightened consumer awareness will encourage developers to pass on the savings to homebuyers, leading to more competitive pricing and increased demand.

How will the reforms impact the luxury housing segment?

For luxury housing, the works contract tax structure remains unchanged, ensuring stability for both developers and discerning homebuyers. However, reduced rates on critical construction materials can lower procurement costs across the supply chain.