GST Reset: Real Gains For Buyers?

The Goods and Services Tax (GST) Council’s decision to adopt a simplified two-slab structure, along with lower rates on essential construction materials such as cement and steel, has stirred wide discussion across India’s real estate sector. Developers and industry stakeholders have hailed it as a long-awaited reform with the potential to ease compliance, cut construction costs, and improve affordability. The real question, however, is how far these changes will go in reshaping the market and whether the ultimate beneficiaries will be homebuyers.

Ashwinder R. Singh, Vice Chairman, BCD Group, Chairman, CII Real Estate Committee, & Advisor, NAR India, welcomes the simplification for the predictability and compliance relief it brings but cautions that it alone may not lower costs significantly, as inputs like cement, steel, and land remain partly outside the GST framework. “The real benefit for buyers,” he says, “is indirect — greater transparency, smoother transactions, and, if paired with rationalisation in related charges like stamp duty, more meaningful affordability gains.”

Others are more bullish on the impact. Reeza Sebastian Karimpanal, Chief Revenue Officer – Residential, Embassy Developments Ltd., calls it a ‘game-changing reform’ that enhances project viability, improves affordability for homebuyers, and, beyond immediate efficiencies, acts as a strong enabler for sustained demand and faster delivery.

Adding a financing-sector perspective, Rajesh Sharma, MD, Capri Loans, describes GST 2.0 as a ‘forward-looking reform’ that simplifies the tax framework while lowering costs for both businesses and consumers. He notes that reducing levies on cement and steel directly cuts construction expenses, making housing more accessible and supporting a more inclusive, growth-driven economy.

Lower Input Costs: A Game-changer for Developers

For years, cement, one of the most essential materials in construction, was taxed at 28%, making it one of the highest-rated items under GST. Neeraj Akhoury, President, Cement Manufacturers’ Association & MD, Shree Cement, noted that lowering the GST on cement to 18% corrects a long-standing anomaly. “This reduction ensures parity with other key materials and enhances the competitiveness of the Indian cement industry. Given cement’s foundational role in housing and infrastructure, treating it more fairly aligns the country with global practices and will likely boost consumption,” says Akhoury.

The impact of this shift is significant because construction materials like cement, steel, and allied inputs account for nearly 40–45% of total project costs. Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, finds the rate cut a decisive step that provides much-needed relief. He added that the reform allows developers to pass on part of the savings to homebuyers, improving affordability and stimulating demand, particularly during the festive season.

Passing the Benefits to Buyers

While the tax cuts undeniably ease pressure on developers, the key question is how much of this saving will benefit end-users. Dr. Samantak Das, Chief Economist & Head - Research, JLL India, cautions that reductions may not drastically slash home prices. “Our ground-level data suggests that the reduction in home prices may range between 1–1.5%, assuming developers transmit the entire benefit,” he states. However, he further elaborates that the impact would be more visible in affordable and mid-segment housing, where even marginal cost reductions can spur demand. In premium housing, developers may use savings to reinvest in quality and amenities rather than lower prices outright.

Pradeep Aggarwal, Founder & Chairman, Signature Global, echoes this view, stressing that rationalisation will make homeownership more accessible for a wider population, particularly by reducing costs in affordable housing.

Compliance and Transparency: Simplification at Last?

Beyond affordability, developers have long grappled with a complex GST framework involving multiple slabs, exemptions, and disputes over input tax credit (ITC). The move to a two-tier system is expected to ease compliance significantly. Dr. Niranjan Hiranandani, Chairman, NAREDCO and Hiranandani Group, defines the reform as progressive, noting that reinstating ITC along with lower rates will enhance cash flow management, reduce tax burdens, and simplify project execution timelines.

Sandeep Aggarwal, CMD, AIL Developer, also underscores the importance of simplification. “Previously, multiple slabs created ambiguity and litigation. A simplified two-slab framework will streamline taxation, improve transparency in pricing, and reduce hidden burdens for buyers,” he states.

Developers agree that clarity in tax obligations reduces uncertainty and improves financial planning. Sanjay Dutt, MD & CEO, Tata Realty, too agrees that the shift from a four-tier to a two-slab system significantly simplifies our tax architecture, enhancing operational efficiency. According to him, the reduction in GST on inputs could directly lower project costs by 5–10%, creating room for affordability and disciplined pricing.

Stimulating Demand Across Segments

The reforms are widely seen as demand stimulators. Chandresh Mehta, Executive Director, Rustomjee Group, points out, “Reductions not only cover cement but also materials like marble and granite, which will temper prices, particularly in affordable and mid-mass segments.” Similarly, Lohit Bansal, MD, PLPB, calls the reform ‘a landmark’ that revives sentiment and attracts fresh investment into housing and urban infrastructure.

For first-time buyers, transparency and affordability are key. Prashant Kajaria, MD, SPA Group, says a streamlined system gives buyers clarity on tax components and reassurance that savings are being passed on fairly. This, he believes, will particularly encourage uptake in emerging markets like Hosur and Sarjapur, where demand for plotted developments and integrated townships is rising.

Balancing Segments: Affordable vs Luxury

The effect of GST rationalisation will not be uniform across housing categories. Rajat Khandelwal, Group CEO, Tribeca Developers, explains that for mid-segment buyers, rate cuts lower upfront costs and improve accessibility. “In the luxury segment, while the impact is modest, even partial easing bolsters confidence by softening cost escalations on high-value interiors and fittings,” he says. The broader outcome, he adds, is stronger consumer confidence and greater transparency.

Anand Pandit, CMD, Sri Lotus Developers, reinforces this view, noting that while affordable housing stands to gain the most in direct price reductions, luxury projects also benefit from streamlined processes and improved investor confidence.

Reinvesting in Quality and Sustainability

Several developers see the reform not just as a cost-saver but as an enabler of quality and innovation. Vimalendra Singh, Chief Business Officer, Mahindra Lifespace Developers, argues that savings on core materials can be reinvested into design, sustainability, and comfort, thereby strengthening buyer confidence over time. Payas Agarwal, Director, Great Value Realty, highlights another dimension: the GST slab revision on renewable energy equipment. He says it will catalyse green building adoption and wellbeing-focused living spaces, aligning affordability with sustainability.

Industry-wide Consensus on Benefits

Across the board, the consensus is that the two-slab GST model is a timely and progressive reform. Robin Mangla, President, M3M India, is of the view that the simplified framework will foster efficiency, reduce uncertainty, and strengthen the foundation for long-term growth. Jetaish Gupta, Founder, Adore Group, adds that cutting cement GST to 18% is an enabling gesture that empowers builders to deliver affordable homes and expedite timelines.

Saurabh Saharan, Group MD, HCBS Developments, sums it up well, saying, “Simplified slabs of 5% and 18% mean greater transparency in pricing for buyers, while developers benefit from better viability. This reform is poised to boost demand during the festive season and give the housing market strong growth momentum.”

Conclusion: Will Homebuyers Reap the Full Rewards?

The reduction of GST rates and simplification into two slabs represents one of the most decisive tax reforms for India’s realty sector since GST’s inception. The move tackles three pressing concerns at once: high construction costs, complex compliance, and weak affordability. Developers are optimistic that these reforms will strengthen demand, improve project viability, and build confidence in the sector.

However, the extent of benefits for homebuyers will depend on how effectively savings are transmitted down the line. As JLL’s Dr. Das cautions, reductions in home prices may be modest in absolute terms, yet marginal affordability gains, coupled with greater transparency and efficiency, are enough to stimulate sentiment in a price-sensitive market.

In essence, GST 2.0 is more than just a tax reform — it is a structural reset for Indian housing. If implemented efficiently and embraced responsibly by developers, it can reduce costs, simplify compliance, and make homeownership more attainable for millions of families. The coming quarters will reveal whether this optimism translates into sustained growth and genuine affordability in the country’s realty market.