GST on cement drops to 18%, experts hint at boost in demand for housing ahead of the festive season

The cut, effective September 22, is expected to ease input costs, improve project viability, and offer relief to homebuyers just ahead of the festive season, according to developers.

The Goods and Services Tax (GST) council’s decision to reduce the tax rate on cement from 28% to 18% on Tuesday marks one of the most significant reforms for the construction ecosystem in recent years. Cement, which makes up nearly a quarter of overall project costs, has long been a source of pressure for developers working with tight margins. The cut, effective September 22, is expected to ease input costs, improve project viability, and offer relief to homebuyers just ahead of the festive season, according to developers.

Developers said this rationalisation will bring down construction costs by 3–5%.

Alongside cement, other construction materials such as sand, lime, stone fittings, tiles, and bricks will also see a reduced GST rate of 5%, down from 12%. Developers said this rationalisation will not only bring down construction costs by 3–5% but also help accelerate stalled or delayed projects, ensuring timely deliveries and restoring buyer confidence.

Relief for developers

For developers, the cut in GST on high-cost inputs allows for improved cash flow management and healthier margins.

“The exciting part about the GST cut is not just the lower tax outgo, but the certainty it delivers to the real estate sector,” said Bhupindra Singh, COO, RISE Infraventures. “In housing, reduced levies immediately narrow the gap between buyer affordability and pricing, especially in the affordable and mid-income segments. On the commercial side, rationalised costs enhance project viability and boost investor confidence.”

Industry leaders pointed out that the new structure, which simplifies GST slabs into 5% and 18%, is more than a temporary relief. It is being read as a structural reform that will rebalance the cost dynamics of real estate over the long term.

Opportunity for homebuyers

For homebuyers, the benefits are direct. Lower construction costs translate into either price corrections or more attractive pre-launch offers. Faster completions and stronger supply across segments are also expected. “The proposed reduction is a welcome step that can catalyse both supply and demand,” said Aman Sarin, director, CEO, Anant Raj Limited. “For buyers, a clearer two-slab system improves transparency and trust. For developers, it reduces input costs and strengthens long-term project viability.”

“For homebuyers like us, the reduction of GST on cement is more than just a policy change—it gives hope that developers will finally be able to control costs and deliver projects on time. Affordable housing buyers are the most impacted when costs escalate, so this move can directly ease the burden on families and bring greater trust back into the market,” said Ritu Bhariok, legal advisor, federation of Affordable Home Buyers.

Sumit Ranjan, COO of Roots Developers, said “The GST slab cut is a fantastic step towards making homeownership a reality for more people. It addresses one of the industry’s biggest pain points—high construction costs. This will directly boost buyer sentiment and sales this festive season, accelerating the ‘Housing for All’ mission.”

Festive season push

The timing of the announcement, just weeks before Diwali, is expected to provide a major boost to property transactions. Developers are likely to fold the reform into their festive season campaigns, offering incentives and highlighting affordability to attract buyers. “Truly a Diwali gift for the Indian consumer,” said Vikas Dua, founder and director, Chintamanis. “This is not just about real estate—it’s about strengthening the entire economy, as the benefits ripple across agriculture, industry, and housing.”

While the real estate sector across metros is expected to see an immediate push, the real impact may be most visible in Tier-II and Tier-III cities, where affordability is a key driver. Experts, however, cautioned that the actual benefit will depend on how much of the savings developers pass on to buyers, as costs for steel, land, and labour remain high.

Even so, the reform is being seen as a strong domestic stimulus at a critical time. With lower costs, improved transparency, and the festive season ahead, the industry is hopeful that the new GST regime will drive sales momentum and reinforce housing as a key pillar of India’s growth story.