The real estate sector has welcomed the government’s decision to lower Goods and Services Tax (GST) rates on key building materials. Developers stated that the move will help reduce costs, improve project viability, and open up opportunities for more affordable housing.
The 28% GST on steel and cement has been reduced to 18%. Paints and varnishes have also decreased from 28% to 18%, while bricks, tiles, and sand are now covered under the 5% slab instead of the 18%. Industry representatives said that these reductions will make construction more affordable at a time when demand for housing is increasing across cities.
Piyush Bothra, Co-founder and CFO of Square Yards, said, “The tax rate cut is a major boost for the realty sector, and as a result, projects will become more viable apart from streamlining tax compliance, making processes smoother and faster. For the residential segment, this is likely to translate into tangible benefits for homebuyers as developers pass on the savings over the coming months.”
Developers, feeling a sense of relief, highlighted that cement and steel account for a significant portion of overall construction costs. It is expected that reduced taxes on these inputs will ease the pressure on working capital and budgets. As a result, developers are likely to find it easier to complete current projects and plan new launches at more reasonable prices.
For buyers, the tax cut might not cause an immediate drop in home prices but is likely to enhance affordability. Builders noted that reduced costs could be passed on gradually, especially in the mid-income and affordable segments where price sensitivity remains high. This gradual but significant impact is expected to reassure and boost the confidence of homebuyers in their investment.
Sector analysts said the new rates bring India closer to global tax practices, where core building materials are not taxed at the highest slabs. This alignment with global standards is expected to support housing supply, strengthen demand, and give a boost to infrastructure-linked industries, making the audience feel that India is moving towards international standards.
Industry participants mentioned that the savings from reduced GST will enable developers to invest more in better specifications and amenities without adding financial strain on buyers. For example, developers could allocate the saved funds to enhance the quality of specific aspects of housing projects. Additionally, lower costs may speed up the completion and handover of delayed projects, increasing confidence in the market. Overall, the sector anticipates that this decision will boost housing demand during the festive season and align with the government’s aim of promoting broader home ownership.
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Published Date: 5 Sep, 2025
