GST Reduction on Cement and Steel Expected to Lower Housing Costs

GST Reduction on Cement and Steel Expected to Lower Housing Costs

India: The decision of the GST Council to reduce tax on cement and other construction materials from 28 per cent to 18 per cent has been welcomed by real estate developers, who expect it to reduce construction costs by around 3–5 per cent. Research by ANAROCK highlighted that the affordable housing category, defined as units priced below INR 4 million (USD 48,000), has seen its share of total sales fall from 38 per cent in 2019 to 18 per cent in 2024, while new supply dropped from 40 per cent in 2019 to 12 per cent in the first half of 2025. Developers believe the tax cut could improve cash flows, margins, and project viability, particularly if the reduced costs are passed on to buyers, thereby encouraging demand in affordable and mid-market housing segments.

Industry leaders have stated that the GST revision could support housing affordability and accelerate infrastructure growth. According to developers, the measure is expected to lower overall construction costs by around 1–1.5 per cent, though the impact will differ depending on project type and location. They emphasised that the reform could stimulate demand, improve cash flows, and strengthen buyer confidence while supporting government objectives such as the Housing for All initiative. Developers also noted that the decision could have broader benefits for both mid-income and premium housing segments, which remain key drivers of the sector.

Source: Deccan Herald