GST Reforms: Two-Slab Structure to Boost Real Estate Growth
New Delhi: The 6-member Group of Ministers (GoM) on Goods and Services Tax (GST) rate rationalisation has accepted the Centre's proposal to adopt a two-slab structure of 5% and 18%. This move aims to eliminate the 12% and 28% slabs, with 99% of items in the 12% bracket being reclassified to 5% and 90% in the 28% slab coming down to 18%. Experts believe that this simplification will benefit homebuyers. The new slabs are expected to be in place by Diwali.
Reduction In Effective Prices In Affordable Segment
According to Ashwani Kumar, Pyramid Infratech, the proposed two-slab GST structure can ease project costs by rationalising rates on construction materials like cement, steel, or paint that heavily influence both housing and commercial projects.
For homebuyers, that could mean a reduction in effective prices, especially in the affordable and first-time buyer segments for whom every penny counts. In commercial real estate, lower input costs improve project viability, making assets more attractive for occupiers and investors. Developers are likely to pass relief through, boosting confidence and festive-season demand, Kumar said.
Commercial Segment To Witness Boost
Uddhav Poddar, CMD, Bhumika Group, believes that the commercial segment could see a significant boost from rationalisation, as lower taxes on materials such as cement, steel, and fittings directly improve project viability for office spaces, retail hubs, and mixed-use developments.
Reduced costs not only encourage new supply but also attract institutional investors seeking stability. Besides, a spillover benefit will be felt in the hospitality segment, adding to the tailwinds it's already experiencing. By easing input costs and simplifying compliance, this would reinforce India’s standing as a destination for high-quality commercial and lifestyle infrastructure, he added.
Mohit Gawri, VP-Sales, RISE Infraventures, stated that reduced levies on construction inputs could finally narrow the gap between buyer expectations and pricing, thereby unlocking demand in both the affordable and mid-income segments. On the commercial front, especially in office and retail, rationalised costs improve project viability and make investments more attractive.
Together, these changes could make both housing and commercial assets more attractive, supporting broader growth across India’s real estate spectrum, he concluded.
