NEW DELHI: Property prices could fall by up to 5% following the reduction in goods and services tax (GST) on key construction materials. The GST on cement has been cut from 28% to 18%, while the tax rate on marble and granite blocks has been reduced from 12% to 5%.
Anuj Puri, Chairman of ANAROCK Group said that the forthcoming GST changes, which will go into effect from September 22, 2025, will have a positive impact on the Indian residential, retail, and office real estate sectors. Puri added that reduced GST on construction materials like cement can reduce construction costs by as much as 3-5%.
“Developers, especially those engage in creating affordable housing, will get major relief in terms of cash flows and margins. The reduced construction costs, if passed on to homebuyers, can boost demand in these segments,” he added.
Anshuman Magazine, Chairman & CEO of India, South-East Asia, Middle East & Africa at CBRE said with cement, steel, and other inputs typically accounting for nearly 40–45% of total construction costs, this reduction will meaningfully lower project expenses. Developers can now pass on part of these savings to homebuyers, improving affordability and stimulating demand across segments. This timely reform comes as a festive season boost, creating the right conditions to spur homebuyer sentiment and drive purchase decisions.
The GST Council, led by Finance Minister Nirmala Sitharaman, on Wednesday gave its nod to a two-tier rate structure of 5 and 18% with the new structure set to be implemented from September 22. As part of these changes, a special 40% GST slab has been introduced for “super luxury” and “sin” goods.
Mohit Goel, Managing Director, Omaxe said that by reducing rates on key inputs like cement, granite and marble, the government has eased cost pressures in construction and simplified compliance, improving affordability for homebuyers, especially in the under-construction segment.
“This reform comes at an important moment with stable interest rates, strong festive sentiment and rising demand for quality housing shaping a positive outlook. This balanced approach to taxation will not only benefit homebuyers but also strengthen the broader housing ecosystem, driving investment, employment, and confidence across Bharat’s growing cities,” added Goel.
Aman Sarin, Director and CEO of Anant Raj Limited said that a clearer, two-slab GST structure will also provide buyers with greater transparency about their overall tax liability, improving trust and confidence in the sector.
“For homebuyers, the benefits are even more direct. Lower construction costs, will translate into reduced property prices and improved affordability. For developers, a lower GST rate will not only help in reducing input costs, but will also help in improving viability of projects in long run. Overall, this move can provide the momentum needed to boost demand, spur new supply, and strengthen housing accessibility across segments,” added Sarin.
However, recent developments have complicated the landscape for commercial real estate. This segment currently attracts 12% GST with Input Tax Credit (ITC) available.
Puri of Anarock said that the elimination of ITC on commercial property leasing implies that developers will no longer be able to claim ITC on project-related costs. This retrospective amendment may increase operational costs and rental prices for office spaces and other commercial properties.
He added that the Reverse Charge Mechanism (RCM) for commercial property rentals by unregistered suppliers, which requires tenants rather than landlords to pay 18% GST on such rentals, adds compliance burden for businesses renting commercial spaces.