GST Cut on Cement, Construction Materials to Ease Costs, Boost Housing Demand

The GST Council’s decision to reduce tax rates on certain key construction inputs would ease project costs and thus improve housing affordability, industry players said. As an addendum, the Council has just announced a reduction of GST on cement from 28% to 18%, and from 12% to 5% on construction and finishing materials.

Venkatesh Gopalakrishnan, Director – Group Promoter’s Office and MD of Shapoorji Pallonji Real Estate (SPRE), called the tax cut a timely boost for the real estate sector.

“We welcome the GST Council’s landmark decision to rationalise tax rates on essential construction materials. The rate cut… is a strategic move. It will significantly ease project costs for developers and boost affordability for homebuyers,” he said.

According to Gopalakrishnan, the relief will improve project viability, allow developers better margins, and support more competitive pricing for end-users. “From the perspective of the housing market, especially the affordable and mid-income segments, this development is timely and impactful… We are optimistic that this reform will enhance purchase intent, especially as we enter the festive season,” he added.

Analysts also see strong benefits for rural housing. Anupama Reddy, Vice President & Co-Group Head at ICRA, said the reduction in cement GST alone would bring tangible savings for rural families.
“Cement accounts for nearly 10–12% of total construction costs in rural housing. This tax cut translates into a 0.8%–1.0% reduction in overall construction expenses,” she noted. The reduction would bring down cement bag prices by about INR 26-28, relieving low-income households in India, while, at the same time, keeping cement manufacturers’ profitability almost intact.

Speaking at a press conference, Reddy pointed out that the timing of the announcement also coincides with a surge in construction activity post-monsoon, which makes it even more effective.

Prices of construction materials have also started to cool down; hence, both the developers and analysts believe this would mean not only better affordability but also a renewed thrust for India’s “Housing for All” mission and kickstart demand in the urban and rural housing markets.