GST Reforms: Two-Slab Structure and Its Impact on Housing Prices and Demand
The simplification of GST into two slabs of 5% and 18% could significantly affect housing prices and buyer sentiment, potentially boosting demand and market liquidity in both residential and commercial real estate.
Gst ReformHousing PricesReal EstateMarket LiquidityBuyer SentimentReal Estate NewsAug 22, 2025
Industry experts say the simplification could have a notable impact on housing prices and buyer sentiment. Gaurav K Singh, Chairman & Founder of Womeki Group, described the reform as “a transformative step for Indian real estate” that could improve pricing efficiency and transparency, ultimately boosting buyer confidence and accelerating sales.
Manik Malik, CEO of BPTP, noted that while developers will continue to pay 18% GST on contract services, the overall market benefits are clear. “Improved liquidity, streamlined compliance, and enhanced investor and homebuyer sentiment are undeniable,” he said, adding that a rational tax framework fosters long-term confidence and demand in the sector.
Yashank Wason, Managing Director at Royal Green Realty, highlighted the potential effect on affordability, pointing out that lower input tax for developers could reduce project costs and make housing inventory more accessible to buyers. “By bringing down overall project costs, this decision can unlock demand and improve buyer sentiment,” he said.
Rakesh Malhotra, Founder and Chairman of PRIME Developments, added that the simplified structure “significantly reduces developer input tax costs, making housing projects more affordable,” which could ease the financial burden on buyers, boost demand, and accelerate inventory clearance.
Legal expert Venket Rao of Intygrat Law Offices emphasised the regulatory clarity the reform brings, strengthening transparency under the Real Estate (Regulation and Development) Act (RERA) and helping developers, financial institutions, and homebuyers navigate the sector more efficiently.
What it means for buyers? Analysts say the two-slab GST system could translate into savings for homebuyers. Projects previously taxed at 12% could now see costs fall, potentially lowering the overall purchase price by several percentage points depending on the project size. Experts believe this could stimulate demand in both residential and commercial real estate, improve market liquidity, and make housing more accessible to first-time buyers and middle-income families.
Frequently Asked Questions
What are the new GST slabs approved by the GoM?
The Group of Ministers (GoM) on GST rationalisation has approved the Centre’s proposal to simplify the Goods and Services Tax (GST) into two slabs of 5% and 18%, removing the 12% and 28% rates.
How could the new GST slabs affect housing prices?
The new GST slabs could lower housing prices by reducing input tax costs for developers, which could be passed on to buyers, potentially lowering the overall purchase price by several percentage points.
What are the potential benefits for homebuyers?
The simplified GST structure could make housing more affordable, improve buyer sentiment, and stimulate demand, especially for first-time buyers and middle-income families.
How will this reform impact the real estate market?
The reform is expected to improve market liquidity, streamline compliance, and enhance investor and homebuyer confidence, leading to a more efficient and transparent real estate market.
What is the Real Estate (Regulation and Development) Act (RERA)?
The Real Estate (Regulation and Development) Act (RERA) is a regulatory framework aimed at promoting transparency, accountability, and consumer protection in the real estate sector.
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