Year-ender 2025: GST Cuts on Construction Materials Reshape Real Estate Sector

In 2025, the GST Council implemented substantial tax cuts on construction materials, which significantly reshaped the real estate sector. Cement saw a reduction from 28% to 18%, bricks, tiles, and sand from 18% to 5%, paints and varnishes from 28% to 18%, and marble and granite blocks to 5%. Even modest reductions of 2–3% proved significant for middle-income homebuyers, especially when combined with festive offers and flexible payment plans.

For the ₹50 lakh–₹1 crore housing segment, these cuts improved affordability, although the extent of the benefit depends on the project stage, procurement cycles, and contractual frameworks. Whether developers pass on these savings in 2026 with new launches remains to be seen. The GST reductions also provided a boon for individuals constructing homes on their own plots, lowering overall costs and enhancing budget flexibility.

Take the case of Rajesh Kumar, a 38-year-old IT manager from Kolkata’s Salt Lake, who had been hunting for an apartment for months. In early September, a ready-to-move project on the outskirts of New Town quoted ₹72 lakh for a 1,200 sq ft unit, with a ₹12 lakh down payment at booking. Then the GST Council’s cuts came into effect: cement rates fell to 18%, and tiles and marble blocks to 5%. By Diwali, the developer rolled out a GST relief scheme, offering ₹1.8 lakh off the base price.

The GST Council’s bold move, effective September 22, 2025, slashed rates on key construction materials just as festive demand peaked. Rather than passing on flat reductions, developers channeled the savings into targeted discounts, flexible payment plans, and no-down-payment schemes.

Cement and ready-mix concrete fell from 28% to 18% GST, bricks, tiles, and sand from 18% to 5%, paints/varnishes to 18% from 28%, and marble/granite blocks to 5%. A ₹80 lakh apartment nets ₹2-4 lakh developer savings, down 1-2% for buyers (₹1-3 lakh). While immediate price cuts may not be a reality, most developers are expected to pass on a significant portion of these savings to buyers, either through price adjustments, flexible payment plans, or attractive festive offers.

Even modest savings of 2% to 3% can make a significant difference in the middle-income segment, especially when combined with festive offers and payment plans, according to experts. Projects priced ₹50 lakh to ₹1 crore led the gains, aligning closely with housing schemes.

The GST cuts also benefited those who planned to construct a property on a plot of land. Suppose 100 bags, each weighing 50 kg and costing ₹1,000, are required for the construction of a house. Up to September 21, 2025, a household would spend ₹28,000 in GST on the purchase of cement. However, after the new rates come into force, the same household would spend only ₹18,000 on cement. Therefore, it results in a direct saving of ₹10,000. Similarly, GST rates have also been brought down for a few other building materials, such as marble and granite blocks, from 12% to 5%, offering direct savings to households.

To put this into perspective, consider a person planning to build a single-storey, 1,000 sq ft home on a 300 sq yard plot in a Tier-2 city. The project includes basic construction materials, cement, steel, tiles, bricks, and boards, as well as interior materials like modular kitchens and wardrobes. Cement would be around 16 per cent of the cost. Bricks may account for 4 per cent, granite for about 0.5 per cent, and boards for false ceilings for about one per cent. So, if the total project cost is ₹30 lakh, then the savings on cement come to around ₹80,000, on bricks ₹1.2 lakh, on granite about ₹15,000, and on boards about ₹30,000. That adds up to a total saving of about ₹59,550. So overall, the saving is roughly 2 percent of the total cost, around ₹60,000 on a ₹30 lakh project.

What should homebuyers do in 2026? GST cuts can reduce the cost of building and finishing a home, but buyers must remain vigilant. Request all-inclusive pricing from developers; this is the only way to gauge the actual benefit. Materials such as cement, marble, granite, and tiles are the most likely to reflect the impact of the revised GST rates. Immediate price reductions are unlikely for projects already under construction. The real advantage is expected in new launches or bundled material deals. Most importantly, focus on overall affordability to ensure the home doesn’t overstretch your budget. As 2026 begins, these lower tax rates are likely to influence pricing more steadily, giving buyers a better opportunity to negotiate and plan wisely.