GST vs. No GST: How Much Can Homebuyers Really Save Under The New Tax Regime?

The recent GST rationalisation, particularly the sharp reduction of tax on cement from 28% to 18%, marks a game-changer for the housing sector. The proposed GST rationalisation will bring much-needed clarity and efficiency to the real estate sector.

For homebuyers, the reduction of GST on cement from 28% to 18% is a welcome relief. Since cement and other construction materials make up a significant part of project costs, this cut is expected to bring down construction expenses by around 3-5%.

"For those purchasing under-construction homes, this can translate into lower property prices, better offers from developers, and quicker project completion timelines. In the affordable and mid-segment categories, where budgets are tight, even a 2-4% reduction can make a meaningful difference, making homeownership more within reach under the new tax regime," Mohit Batra, Regional Director, Realistic Realtors said.

New GST Rates to Ease Real Estate Costs, But Will Benefits Reach Buyers?

Until now, GST on cement stood at 28% and finishing materials like marble and tiles at 12%, which kept construction costs high. Under the new structure, with GST rationalised to 18% on cement and 5% on key finishes, developers can expect a 2-5% reduction in the overall cost of new projects.

"For homebuyers, this could mean tangible savings, though not as an instant price cut but through competitive pricing, flexible payment plans, and festive schemes. It is expected that developers will pass on most of these benefits to boost consumption and meet customer expectations. While the relief is most visible in new projects, older contracts will see only marginal benefits," said Ms. Binitha Dalal, Founder & Managing Director, Mt. K Kapital.

The government should also address double indexation on redevelopment and JDAs and provide a stronger push for affordable housing to truly transform the cost dynamics of the sector.

Why Homebuyers May Not See Immediate Savings Despite GST Reduction?

While the GST cuts on materials like marble, granite and cement are a positive step, the real impact for buyers won't be immediate.

"It may take until the end of the quarter for revised pricing to filter through projects already in progress. For premium homes, the difference will be marginal since finishes and design elements drive most of the cost," said Mr. Aditya Kushwaha, CEO and Director, Axis Ecorp.

Where the change truly helps is in lowering overall construction expenditure, allowing developers to reinvest in better quality, thoughtful design and long-term value-especially in growing second-home and holiday markets like Goa, hill stations like Shimla and Rishikesh, and areas near major metros such as Lonavala.

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