GST Rate Cut: Will Homebuyers See Lower Property Prices in 2025?
The GST Council’s latest reforms could bring some relief to India’s real estate sector. In its 56th meeting, the Council announced a simplified two-slab structure of 5% and 18%, calling it a “Diwali bonanza” for consumers. A key highlight is the reduction of GST on essential construction materials, a move expected to lower project costs for developers and potentially ease property prices for homebuyers.
Cement, Bricks, and Stone Get Cheaper
One of the biggest changes is the cut in GST on cement—from 28% to 18%—a significant reduction given that cement and steel together account for nearly 40–45% of construction costs. The GST on granite, marble, and travertine blocks has also been reduced from 12% to 5%. Similarly, fly ash bricks and sand-lime bricks, which dominate today’s construction market, have seen their tax rates drop from 12% to 5%.
“This move will help lower overall construction costs. Developers are expected to pass on these benefits to buyers through reduced property prices, especially as prices have risen sharply in recent years,” said Deepak Kumar Jain, founder and CEO of TaxManager.in.
Industry Reactions
Experts across the industry welcomed the changes. Anshuman Magazine, Chairman and CEO of CBRE (India, SE Asia, Middle East & Africa), called it a decisive step:
“With cement, steel, and other inputs forming a large part of costs, the rate cuts will lower expenses and improve affordability. This festive season reform can revive buyer sentiment and drive purchase decisions.”
Vimal Nadar of Colliers India added that residential real estate, particularly affordable housing, stands to gain the most. Combined with lower EMIs from recent repo rate cuts, the timing could provide a strong boost to sales in the coming festive months.
The ITC Roadblock
However, concerns remain about the blockage of input tax credit (ITC) for buildings intended for rental use. The Supreme Court’s ruling in the Safari Retreat case favored ITC, but a retrospective amendment by the GST Council barred it from July 2017 onwards.
“If this provision is relaxed prospectively, it would be a game-changer for real estate. Developers are awaiting clarity because tax credits significantly impact long-term viability,” said Vivek Jalan of Tax Connect Advisory Services.
Will Buyers See the Benefit?
A key question persists—will developers actually pass on the benefits? Some may retain the savings to safeguard margins, especially as many projects are tied to fixed contracts. But the government has assured strict engagement with developers to ensure that tax cuts reach homebuyers.
“Ultimately, market forces will also compel builders to share the cost reductions with buyers,” Jalan added.
For now, the reforms mark a step toward reducing financial burdens in housing, but the real test will be whether lower GST truly translates into affordable homes.
