GST Relief on Building Materials: A Boon for the Real Estate and Housing Sector
The real estate and housing sector is set to benefit from the GST Council's decision to reduce tax rates on essential construction materials, which is expected to lower overall project costs for developers and homebuyers.
GstReal EstateHousing SectorConstruction MaterialsTax ReductionReal EstateSep 03, 2025
At its 56th meeting, the government slashed the GST on cement, one of the most critical inputs for housing and infrastructure, from 28% to 18%. Cement alone accounts for a significant portion of construction expenses, and the steep reduction in tax is likely to ease cost pressures across residential and commercial projects.
Similarly, the rate on marble and travertine blocks has been cut from 12% to 5%, while granite blocks will also attract only 5% GST compared to 12% earlier. Sand-lime bricks and stone inlay work too have seen their tax rate reduced to 5% from 12%. These cuts are expected to make finishing and structural materials more affordable, directly impacting construction budgets.
The GST rationalisation is a festive bonanza for Indian consumers and a strategic boost for the economy. By enhancing purchasing power, stimulating consumption, and helping contain inflation, this reform creates a multiplier effect that will propel India’s GDP growth beyond 8%, said Niranjan Hiranandani, Chairman of NAREDCO National. “This rationalisation is not just a boost for developers—it is a win-win for consumers, the housing sector, and India’s long-term growth story.”
Industry participants said the measures would help moderate project costs at a time when demand in both mid-income and premium housing segments is expanding. “The reduction in GST on cement and other key building materials is a much-needed relief for the real estate sector. It will support developers in managing costs better and can provide a cushion against price escalation for homebuyers. Overall, these changes will help in a 5% saving in construction cost, and the same will be passed on to homebuyers in due course of time,” Shekhar Patel, President of CREDAI National, told ET.
The benefit of lower material costs is unlikely to reflect immediately, as most developers are bound by ongoing contracts. The reduction will start flowing through only after these current agreements expire and new contracts are negotiated, experts said. Developers, who have been facing pressure from high input costs over the past years, are expected to pass on some of the benefits to buyers while also improving their own margins.
The council has raised GST on certain government works contracts and subcontracting arrangements from 12% to 18%. This may push costs for public projects up, but experts said cheaper cement, granite, marble, and bricks will aid private housing. The move comes as housing demand remains strong in major urban centres, with record sales and registrations in 2025. Lower input costs are expected to encourage developers to accelerate launches, while buyers may benefit from greater affordability and choice.
By reducing the tax burden on core construction materials, the GST Council has provided timely support to the housing sector, which is central to economic growth and urban development.
Frequently Asked Questions
What is the GST rate reduction for cement?
The GST rate for cement has been reduced from 28% to 18%.
How will the reduction in GST on construction materials benefit homebuyers?
The reduction in GST on construction materials is expected to lower overall project costs, which developers are likely to pass on to homebuyers, making homes more affordable.
What other materials have seen a reduction in GST rates?
Marble and travertine blocks, granite blocks, sand-lime bricks, and stone inlay work have all seen their GST rates reduced to 5% from 12%.
How will this affect the cost of public projects?
The GST on certain government works contracts and subcontracting arrangements has been increased from 12% to 18%, which may push up the costs for public projects.
What is the expected impact on the housing sector?
The reduction in GST rates on essential construction materials is expected to encourage developers to accelerate project launches and make homes more affordable for buyers, thereby boosting the housing sector.
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