Housing Market Awaits GST 2.0 Price Cuts; How GST 2.0 Impacts Construction Costs
Homebuyers are yet to see direct price cuts from GST 2.0. Discover why festive discounts, not tax reforms, are currently driving India's housing market.
NEW DELHI – As of late September 2025, India’s housing market has not yet experienced direct price reductions following the implementation of GST 2.0. Instead, property sales are being fueled by attractive discounts and special offers rolled out by developers for the festive season, while the benefits of the new tax structure are expected to materialize in the longer term.
Also Read: NRIs Selling Property in India to Face New Tax Rules and Stricter Scrutiny
The new policy reduces GST on key construction materials but does not lower the final tax rate on property sales. This has created a positive market sentiment, but immediate affordability gains for homebuyers remain pending.
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How GST 2.0 Impacts Construction Costs
GST 2.0 is designed to lower the financial burden on developers by reducing taxes on essential raw materials. These changes are expected to trim overall construction costs by an estimated 3-5%.
Key tax reductions on building materials include:
- Cement and Ready-Mix Concrete: GST reduced from 28% to 18%.
- Bricks, Tiles, and Sand: GST lowered from 18% to 5%.
- Paints and Varnishes: Tax rate cut from 28% to 18%.
Industry experts project these cuts could lead to a cost saving of approximately ₹1,000 per square meter. If developers pass this benefit on to consumers, it could translate into a 1-1.5% reduction in final home prices. For a mid-income buyer, this could mean savings of ₹1 lakh to ₹3 lakh on a property purchase.
Developer Strategies and Market Response
Despite the potential for lower input costs, developers have not yet adjusted property prices. A primary reason is that materials for most ongoing projects were procured before the tax reforms took effect.
Instead, developers are focusing on boosting sales during the festive period covering Navratri, Dussehra, and Diwali. They are leveraging strategies such as:
- Flexible payment plans
- Customized deals and discounts
- Special festive incentives
Real estate bodies like CREDAI and NAREDCO have supported the GST reform, noting that it has created a “feel-good factor” among potential buyers, even though direct financial benefits are not yet visible.
The Delayed Trickle-Down Effect
The impact of GST 2.0 on real estate is slower compared to sectors like automobiles or FMCG, where tax cuts often lead to immediate price drops. The long project cycles in construction mean that the benefits of lower material costs will only become apparent in future project launches.
The final price benefit for homebuyers depends on a two-step process: first, cement and other material manufacturers must pass their GST savings to developers, and second, developers must then transfer those savings to their customers.
Future Outlook: New Projects May See Price Benefits
Market analysts believe that the true impact of GST 2.0 will be seen in new projects launched in the coming months. Developers starting new constructions will be able to factor in the lower input costs from the beginning, potentially leading to more competitive pricing.
Leading developers such as Prestige Group and Signature Global are currently banking on festive sentiment, combined with other favourable policies like the Budget 2025 tax incentives and stable RBI repo rates, to stimulate demand.
While the immediate market buzz is driven by seasonality and developer-led promotions, the groundwork laid by GST 2.0 sets the stage for improved affordability in the mid- to long-term, particularly in the affordable and mid-segment housing categories.
