How GST 2.0 Reforms Could Make Homes More Affordable for Mumbaikars
The recent GST 2.0 reforms are expected to reduce costs on construction materials, potentially making homes more affordable for Mumbaikars. This article explores the impact of these changes on the real estate market.
GstReal EstateMumbaikarsAffordable HomesConstruction MaterialsReal EstateSep 22, 2025
India's festive season typically sees a surge in the sales of various goods, including motorcycles, cars, and even homes. Prime Minister Narendra Modi referred to these reforms as the 'GST Bachat Utsav' in his address to the nation. Specifically, from the perspective of real estate, construction materials are expected to become cheaper due to a lower GST tax rate. Several materials have been moved from the 18 percent to the 5 percent slab.
How Much More Affordable Will It Get?
With the GST slab on construction materials revised to 5 percent, the overall impact is likely to be in the range of 1 to 1.5 percent. While this may not seem significant in percentage terms, it can make a substantial difference in reality. For instance, a 1 to 1.5 percent reduction on a property valued at Rs 1 crore would save the buyer about Rs 1 to 1.5 lakhs.
How Is GST Applied on Realty?
When buying homes, a Goods and Services Tax is levied based on the classification of the property. Here is a simple breakdown of the rates:
- Affordable Home: 5 percent
- GST on Land & Ready To Move Properties: Exempted
- GST on Under-Construction: 12 percent
- GST on Housing Society Maintenance Fees: 18 percent if the contribution is more than Rs 7,500 per month
GST can also be applied to processing fees charged by banks on banking products such as loans. It is important to note that there may not be a GST levied on a loan for purchasing a ready-to-move home. However, if an Occupation Certificate is unavailable, a 12 percent GST may be applicable on top of the loan. The GST on loan processing fees ranges from 0.25 percent to 1 percent of the loan value.
What Will Be the Impact?
The overall impact of these GST changes could be significant, especially considering the volume of real estate apartments sold and built in Mumbai. Mumbai's real estate market contributed Rs 1,101 crores in stamp-duty collection for the state. With the GST reforms, there is an anticipation that luxury homes and affordable home sales will pick up. This could lead to a more vibrant and accessible real estate market for Mumbaikars.
Conclusion
The GST 2.0 reforms are a positive step towards making homes more affordable for Mumbaikars. While the impact may vary, the reduction in construction material costs and the potential for increased sales in the real estate market are promising developments. For those looking to buy a home, now might be a good time to consider the market.
Frequently Asked Questions
What is the GST 2.0 reform and how does it affect real estate?
The GST 2.0 reform reduces the GST rate on construction materials from 18 percent to 5 percent, making construction materials cheaper and potentially reducing the overall cost of homes.
What is the impact of the 1 to 1.5 percent reduction in construction material costs?
A 1 to 1.5 percent reduction in construction material costs can save buyers about Rs 1 to 1.5 lakhs on a property valued at Rs 1 crore, making homes more affordable.
How is GST applied on different types of properties?
GST rates vary: 5 percent on affordable homes, exempt on land and ready-to-move properties, 12 percent on under-construction properties, and 18 percent on housing society maintenance fees if the contribution exceeds Rs 7,500 per month.
What is the impact of GST on loan processing fees?
GST on loan processing fees ranges from 0.25 percent to 1 percent of the loan value. There is no GST on loans for ready-to-move homes unless an Occupation Certificate is unavailable.
How much did Mumbai's real estate market contribute to the state's stamp-duty collection?
Mumbai's real estate market contributed Rs 1,101 crores in stamp-duty collection for the state, highlighting the significance of the market.
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