GST Relief on Building Materials Eases Construction Costs, Boosts Housing Sector
The GST Council's decision to reduce tax rates on essential construction materials is expected to significantly lower project costs for developers and homebuyers, providing a much-needed boost to the real estate and housing sector.
GstReal EstateConstruction CostsHousing SectorTax ReductionReal Estate NewsSep 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 with 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 few 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 new GST rate for cement?
The new GST rate for cement has been reduced from 28% to 18%.
How much will the GST reduction save on construction costs?
The GST reduction is expected to help in a 5% saving in construction costs.
What other materials have seen a reduction in GST?
Marble and travertine blocks, granite blocks, sand-lime bricks, and stone inlay work have all seen their GST rates reduced to 5%.
How will these changes benefit homebuyers?
Developers are expected to pass on some of the savings from lower material costs to homebuyers, making homes more affordable.
When will the benefits of the GST reduction start reflecting in project costs?
The benefits will start reflecting once current contracts expire and new contracts are negotiated.
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