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GST 2.0 and real estate: Can lower taxes on construction materials help you buy an apartment this festive season?
GST 2.0: Even a modest 2% to 3% cost reduction can result in savings of ₹1– ₹3 lakh, enough to reduce upfront payments or lower loan requirements, say experts
The GST Council’s decision to slash tax rates on key construction materials such as cement, granite, and marble is likely to ease project costs for developers and provide some relief to homebuyers. That said, if you’re looking to buy an apartment this festive season, don’t expect instant price drops, especially in ongoing projects that are already in advanced stages of construction and have completed most material procurement.
In such cases, developers are more likely to offer festive discounts, flexible payment plans, or customised deals rather than outright price cuts, say experts.
That said, for new project launches, the benefits of the GST reductions will begin to reflect more directly. As fresh procurement cycles kick in, developers are expected to see a 2–4% drop in overall construction costs, which could eventually translate into more competitive pricing for buyers.
GST 2.0 aims to bring cement and ready-mix concrete under 18% GST (down from 28%), bricks, tiles, and sand to 5% from 18%, and paints and varnishes to 18% (down from 28%).
“These changes will bring down overall construction costs going forward as it will result in a reduction of GST burden by about 20% across various segments of housing, commercial, industrial and warehousing. Additionally, affordable and mid-segment housing stand to gain significantly as reduced construction costs can be passed on to homebuyers, enhancing home ownership possibilities. Coupled with the upcoming festive season, this will augur well for housing sales in the country,” said Anurag Mathur, CEO, Savills India.
Savings for homebuyers
The reduction in GST on cement, from 28% to 18% is projected to lower overall construction costs by approximately 3% to 5% for developers. According to industry experts, this could translate into 1% to 1.5% savings for homebuyers, depending on the project stage. Even a modest 2% to 3% cost reduction can result in savings of ₹1– ₹3 lakh, enough to reduce upfront payments or lower loan requirements, particularly benefiting mid-income buyers when combined with festive offers and flexible payment plans.
Even modest savings of 2% to 3% “can make a meaningful difference in the middle-income segment, especially when combined with festive offers and payment plans,” says Sam Chopra, president and Country Head, eXp Realty India, a real estate brokerage.
A 2% to 3% reduction translates to a savings of ₹1 - ₹ 3 lakh, which can either help reduce the upfront payment or lower the loan amount required. This increase in affordability and confidence is significant for first-time buyers and small players, especially with good payment plans or offers during festival time, he explained.
“For the ₹50 lakh– ₹1 crore housing segment, this creates room for greater affordability, though the actual extent of benefit passed on will vary depending on project stage, procurement cycles, and contractual structures,” says Vishal Tony Vincent, Managing Director, Aratt Developers, a Bengaluru-based real estate company.
Will homebuyers benefit now? Experts say immediate price cuts are unlikely
However, this does not mean that immediate price reductions will happen. “Developers will likely first promote the many benefits through festive discounts, flexible payment programs, or personalised offers,” said Ashish Kukreja, founder and CEO, Homesfy, a real estate advisory.
Will real estate developers pass on the GST cut benefit to homebuyers?
For new projects, the benefit will begin to flow in as soon as fresh procurement cycles start, with overall construction costs expected to ease by roughly 2-4% per cent once the lower rates are fully reflected, said Mohit Goel, Managing Director, Omaxe, a real estate developer.
“While immediate price cuts may not be a reality, most developers are expected to pass on a significant portion of these savings to buyers, either through price adjustments, flexible payment plans, or attractive festive offers rather than an immediate flat price cut,” said Binitha Dalal, founder and managing director, Mt. K Kapital, a real estate-focused investment platform.
Some developers may use this cushion to avoid price hikes in upcoming launches, though ongoing projects are unlikely to see any impact, said another developer.
Market forces to ensure buyers’ benefit
The market itself is the strongest regulator. In today’s competitive landscape, if one developer passes on benefits, others are compelled to follow. In addition, RERA-mandated disclosures and consumer forums keep pricing structures more transparent than ever before.
“Brokers and channel partners also act as watchdogs; they know when value is being passed on and when it isn’t, and buyers increasingly demand that clarity,” says Chopra.
For first-time buyers, every bit of savings adds to affordability. Even a 1–1.5% reduction can be the difference between stretching budgets or confidently making a purchase. With the RBI having paused rate cuts after a cumulative 1% reduction over the three policy reviews, borrowers can also benefit from lower interest rates.
What should homebuyers do?
Buyers could focus on new launches and mid-segment projects, which may pass on benefits faster through discounts or flexible payment plans.
Check for any festive season discounts that developers are offering. It is also important that you consult brokers or legal advisors to ensure RERA compliance and transparent pricing. Combine savings and take advantage of lower rates to budget carefully.
Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics
