GST Reforms Bring Relief: Real Estate and Construction Sector to Benefit

With the Central Government’s latest GST reforms coming into effect today, the public anticipates price reductions across several sectors. Analysts suggest that the construction and real estate industry, in particular, will witness significant benefits. These reforms align with the national mission of “Housing for All” and are expected to stimulate growth in the residential, retail, and real estate segments.

By lowering construction costs and streamlining tax structures, the reforms are likely to drive housing demand and boost investments, making development projects more viable.

A major relief comes in the form of reduced GST rates for essential building materials. Cement and ready-mix concrete, which earlier attracted higher tax slabs, will now fall under the 18% bracket—a reduction of 10 percentage points. Similarly, the GST on bricks, tiles, and sand has been brought down from 18% to just 5%. Paints and varnishes will continue to attract GST at 18%.

Industry experts highlight that cement alone accounts for nearly 11% of overall construction costs, representing 15–20% of total building expenses. A change in cement prices, therefore, has a direct impact on the overall cost of projects. With the revised tax rates, construction expenses are expected to drop by 3–5%. Consequently, homebuyers may see property prices fall by 1–1.5% in the near future.

For Indian cities, where home ownership often remains financially out of reach for the middle class, this reform could prove transformative. Affordable housing may become more accessible, providing relief for aspiring buyers.

On average, developers spend nearly 50–60% of construction budgets on raw materials. The GST rate cuts will allow builders to achieve substantial cost savings—potentially reducing construction costs by as much as ₹1,000 per square metre. This, in turn, can help maintain property prices within affordable limits for buyers while ensuring developers retain profitability.

The reduction in GST is also expected to lower expenses on flooring, tiling, and interior finishing, directly benefiting both homeowners and infrastructure projects. While luxury and premium properties may not reflect dramatic price corrections, experts believe the savings will enable developers to reinvest in enhancing quality and amenities.

In essence, the reforms are expected to make housing more affordable, improve project efficiency, and create a healthier environment for both developers and buyers—paving the way for renewed momentum in India’s real estate sector.