GST Reforms: Two-Slab Structure to Boost Real Estate Growth
The Group of Ministers (GoM) on GST rate rationalisation has accepted a two-slab structure of 5% and 18%. Experts believe this will benefit homebuyers and the real estate sector, especially in the affordable and commercial segments.
GstReal EstateHomebuyersCommercial Real EstateAffordable HousingReal Estate NewsAug 25, 2025
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.
Frequently Asked Questions
What is the proposed two-slab structure for GST?
The proposed two-slab structure for GST includes a 5% and an 18% slab, eliminating the 12% and 28% slabs. This aims to simplify the tax structure and reduce costs for various items.
How will the new GST structure benefit homebuyers?
The new GST structure will reduce the cost of construction materials, leading to lower effective prices for homebuyers, especially in the affordable and first-time buyer segments.
What impact will the GST changes have on commercial real estate?
Lower taxes on construction materials will improve project viability for commercial spaces like office buildings, retail hubs, and mixed-use developments, making them more attractive for investors and occupiers.
When is the new GST structure expected to be implemented?
The new two-slab GST structure is expected to be in place by Diwali.
How will the changes in GST rates affect the hospitality sector?
The reduction in input costs and simplified compliance will have a spillover benefit, adding to the tailwinds the hospitality sector is already experiencing.
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