Two-Slab GST Plan Could Make Homes Cheaper, Ease Developer Costs: Experts

The government plans to bring GST into two slabs of 5% and 18%. This would really help the real estate sector of India in cutting costs for developers, hence making the houses more affordable to buyers, say industry experts.

Prime Minister Narendra Modi, during his speech on Independence Day on August 15, mentioned that the next-gen GST reforms would be rolled out by Diwali, where a part of the plan would focus greatly on reducing the tax rates.

There are multiple GST rates on construction inputs-high rates of 28% on cement, 18% on steel, 28% on paint, and 18% on tiles and sanitary ware. Such high rates lead to an inflated project cost, which ultimately trickles down to the homebuyers.

“The construction industry’s long-standing demand for rationalization of GST rates benefits from such two-slab systems, which ease compliance and reduce input costs, particularly for such materials as cement, which strongly drive housing prices,” says Anshuman Magazine, who chairs as CEO (India, SE Asia, Middle East & Africa), CBRE. He added that it would allow some cushion for commercial property against global uncertainties, such as looming tariffs of 25-50% on Indian exports.

According to Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd, the amendment will help to improve certainty over the long term in project conception and execution in construction. “Simplified GST will rationalize costs, improve cash flows, and ultimately lower home prices,” he stated. Industry leaders believe the move could trigger stronger demand and stability. Aman Sharma, MD, Aarize Group, said lower taxes would allow developers to pass on savings to buyers. “This could set the stage for sustainable growth in the housing market,” he noted.

However, experts also urged the government to address the GST levied on under-construction properties. Currently, buyers not only pay GST but also stamp duty and registration fees, together adding 13–14% to property costs. Vikas Bhasin, MD, Saya Group, said a reduction here would provide “much-needed relief” and stimulate sales in the primary housing market.

If implemented, the two-slab GST system could ease the financial burden on both developers and homebuyers, while giving the real estate sector fresh momentum.