GST Relief on Construction Materials: A Game-Changer for Real Estate
The central government's decision to reduce the Goods and Services Tax (GST) on cement and steel has been hailed as a game-changing move by leaders from the real estate industry, significantly lowering construction costs and boosting demand.
GstReal EstateConstruction MaterialsAffordable HousingTax ReformReal EstateSep 04, 2025
The GST Council has approved a comprehensive overhaul of the Goods and Services Tax (GST) regime. The panel has simplified the GST from the current four slabs—5%, 12%, 18%, and 28%—to a two-rate structure of 5% and 18%. A special 40% slab is also proposed for select items such as high-end cars, tobacco, and cigarettes. This new structure will be effective from September 22, the first day of Navaratri.
According to experts, the reduction of GST on cement is a positive step that will help ease construction costs. Here's what industry leaders have to say about the move:
Lincoln Bennet Rodrigues, Chairman and Founder of Bennet & Bernard, Goa, stated, “The GST rationalisation announcement is expected to increase savings, boost consumption, and improve liquidity and lift overall business sentiment. This is welcome, particularly ahead of the festive season. For the real estate sector, this buoyancy is meaningful, as it will reduce the cost of construction. Housing demand is closely tied to consumer confidence and long-term financial planning. When households save more on essentials, it creates a positive environment that encourages investment in real estate, while also strengthening sentiment around property as a stable and rewarding asset class.”
Deep Vadodaria, Managing Director of Nila Spaces Limited, added, “The recent GST slab rationalisation marks a pivotal shift for the real estate sector. Affordable housing is set to gain significantly, as reduced tax outflows will make home ownership more accessible for first-time buyers and middle-income families. More importantly, these changes will also ease the monthly cash flows of Indian households since essentials are now cheaper, and families will save more on their daily necessities. This additional liquidity enables buyers to take on higher risk for long-term assets like homes, directly improving affordability. In effect, demand will be buoyed by two key factors: lower construction input costs and higher disposable incomes. This aligns well with the government’s push toward Housing for All and will stimulate demand in Tier 2 and Tier 3 cities, where affordability is the key driver.”
Akash Kohli, Founder & CEO of Elante Group, remarked, “The GST rate cut on cement and construction materials is truly a Diwali gift for the real estate sector. A 10% reduction will significantly lower construction costs, enabling us to pass on nearly 60% of the savings to homebuyers. This festive boost will enhance affordability, accelerate demand, and brighten housing dreams for many families. This move will also boost the Indian economy and help build a New Bharat.”
Sumit Ranjan, COO of Roots Developers, commented, “The GST slab cut is a fantastic step towards making homeownership a reality for more people. By slashing the GST on cement and simplifying the tax structure, the government has directly addressed one of the crucial pain points for the real estate industry: high construction costs. This move is a major win, since it will allow developers to finally pass on significant savings, making homebuying a more accessible task. We expect to see a massive boost in buyer sentiment and a surge in sales this festive season. It's a timely and much-needed reformative relief that will accelerate the ‘Housing for All’ mission.”
Aman Sharma, Managing Director and Founder of Aarize Group, noted, “The GST Council’s move to slash tax rates on cement and other construction materials is a landmark step for the sector. Cement alone contributes nearly one-third of overall construction costs, and its rate reduction from 28% to 18% will directly enhance cost efficiency for developers. This will not only accelerate project timelines but also allow developers to channel savings into quality enhancements and sustainable building practices. Importantly, it improves housing affordability for end-users and boosts investor confidence in the long run. Such policy measures provide the necessary impetus for long-term growth in both residential and commercial real estate markets.”
Santosh Agarwal, CFO & Executive Director of Alpha Corp Development Limited, observed, “The rationalisation of GST slabs represents an important step toward simplifying India’s tax framework and enhancing transparency in the real estate sector. By potentially reducing the tax burden on housing, this reform is expected to strengthen buyer confidence, encouraging more informed and faster decisions. For developers, a predictable and streamlined GST structure could reduce transaction complexities and enable smoother project execution. This reform will provide fresh momentum to the real estate sector, supporting sustained growth and reinforcing India’s position as a dynamic housing market.”
Uddhav Poddar, CMD of Bhumika Group, stated, “The rationalisation of GST slabs represents an important step toward simplifying India’s tax framework and enhancing transparency in the real estate sector. By potentially reducing the tax burden on housing, this reform is expected to strengthen buyer confidence, encouraging more informed and faster decisions. For developers, a predictable and streamlined GST structure could reduce transaction complexities and enable smoother project execution. This reform will provide fresh momentum to the real estate sector, supporting sustained growth and reinforcing India’s position as a dynamic housing market.”
Prateek Tiwari, MD of Prateek Group, added, “The GST cut on construction materials marks a decisive push for real estate growth. The commercial segment, in particular, stands to gain as lower taxes on cement, steel, and fittings directly improve project viability for office spaces, retail hubs, and mixed-use developments. This cost efficiency not only encourages fresh supply but also enhances India’s appeal for institutional investors seeking resilient assets. By lowering costs and streamlining compliance, this reform strengthens India’s positioning as a hub for world-class commercial and lifestyle infrastructure.”
Neeraj K Mishra, Executive Director of Ganga Realty, concluded, “The GST Council’s move to rationalise rates by reducing GST on cement and other crucial construction materials is a historic and highly progressive decision. For years, high taxation on these inputs has been a major hurdle for the real estate sector, particularly for affordable and mid-income housing projects. With this reduction, we foresee a substantial decrease in construction costs, which in turn will enable developers to offer more competitive pricing to homebuyers. This will not only revive demand but also encourage faster completion of projects, benefiting both the industry and consumers. We welcome this step wholeheartedly, as it will act as a catalyst in accelerating India’s housing growth story and take us closer to the dream of ‘Housing for All.’”
Frequently Asked Questions
How will the GST reduction on cement and steel impact the real estate sector?
The reduction in GST on cement and steel will significantly lower construction costs, making housing more affordable for buyers. This is expected to boost demand and accelerate project timelines, benefiting both developers and consumers.
What are the new GST slabs proposed by the GST Council?
The GST Council has proposed a two-rate structure of 5% and 18%, with a special 40% slab for select items like high-end cars, tobacco, and cigarettes.
When will the new GST slabs be effective?
The new GST slabs will be effective from September 22, the first day of Navaratri.
How will this GST rationalisation affect the affordability of housing?
The reduction in GST on construction materials will directly lower the cost of building homes, making them more affordable for first-time buyers and middle-income families. This is particularly beneficial for the affordable housing segment.
What is the government's 'Housing for All' mission?
The 'Housing for All' mission is a government initiative aimed at providing affordable housing to all citizens by 2022. The reduction in GST on construction materials is a step towards achieving this goal by making home ownership more accessible.
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