GST Reforms to Simplify Taxation and Boost Real Estate Market
The upcoming GST Council meeting is set to introduce significant reforms, simplifying the tax structure and reducing costs for the real estate sector, leading to increased investment and market confidence.
Gst ReformsReal EstateConstruction CostsMarket ConfidenceTax SimplificationReal Estate NewsSep 02, 2025
Under the proposed reforms, the existing four-rate GST structure will be rationalized into two primary slabs, removing the 12% and 28% tax brackets while retaining the 5% and 18% rates. Additionally, a new 40% slab for sin goods will be introduced. Goods previously taxed at 28% are likely to move to the 18% slab, while items currently under 12% may fall to 5%. The government’s objective is to simplify compliance, reduce cascading effects, and make the taxation system more business-friendly.
The real estate sector is expected to benefit significantly from these changes. Reports suggest that the GST Council is considering a reduction in the GST rate on cement, a critical input for construction, from 28% to 18%. Lower tax incidence on construction materials could reduce overall project costs for developers, potentially leading to more affordable pricing for end-users.
Industry experts note that the previous four-slab structure often created compliance complexities and higher input costs across sectors like construction, FMCG, and automobiles. By rationalizing the rates, the government aims to create a more predictable and transparent taxation environment, encouraging greater investment and operational efficiency.
Mr. Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, commented, “The upcoming GST Council meeting is expected to bring significant reforms that will benefit the economy and the housing sector. The simplified 5% and 18% slabs, coupled with a reduction in taxes on raw materials such as cement, could lower construction costs substantially, creating value for homebuyers while easing compliance for developers.”
He added, “These reforms arrive at a critical juncture when launching value-driven projects demands careful financial planning. Streamlined taxation will help developers deliver projects efficiently, while buyers are likely to benefit from reduced costs and greater transparency. India’s housing sector is well-positioned to maintain growth and resilience as demand for quality homes continues to rise.”
Experts further believe that rationalized GST slabs could accelerate real estate investment, support job creation in construction, and enhance market confidence. A predictable and simplified tax regime may also attract institutional investors to residential projects, improving funding options for developers and enabling faster project completion timelines.
Krishna Group and Krisumi Corporation are leading real estate developers in India, known for their commitment to delivering high-quality residential and commercial projects. These reforms are expected to further solidify their position in the market and contribute to the overall growth of the real estate sector.
Frequently Asked Questions
What are the key changes proposed in the GST structure?
The proposed changes include rationalizing the existing four-rate GST structure into two primary slabs (5% and 18%), removing the 12% and 28% tax brackets, and introducing a new 40% slab for sin goods.
How will the real estate sector benefit from these reforms?
The real estate sector is expected to benefit from reduced construction costs due to lower tax incidence on critical inputs like cement, leading to more affordable housing for end-users and improved market confidence.
What is the impact of the simplified GST structure on compliance?
The simplified GST structure will reduce compliance complexities, making it easier for businesses to manage their tax obligations and operate more efficiently.
How will these reforms affect job creation in the construction sector?
The reforms are expected to support job creation in the construction sector by reducing costs and improving the overall investment climate, leading to more projects and employment opportunities.
What is the role of institutional investors in the real estate sector post-reforms?
A predictable and simplified tax regime is likely to attract more institutional investors to residential projects, improving funding options for developers and enabling faster project completion timelines.
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