Home Real estate GST 2.0 Reform Set to Boost Re...

GST 2.0 Reform Set to Boost Real Estate with Lower Taxes

real estate

Business Honor
23 August, 2025

New GST slabs reduce construction costs, simplify compliance, and improve housing affordability and buyer sentiment.

The government’s new GST 2.0 reform is expected to knowingly benefit the real estate sector. With the introduction of a simplified two slab GST structure 5% and 18% the sector may see lower construction costs, reduced tax burdens and smoother compliance processes.

Currently, construction materials like cement are taxed as high as 28% and other essentials like steel, paints and electrical fittings fall under 18% or 12%. The new system is likely to shift most 12% items to 5% and bring down 28% items to 18%, helping developers cut project costs. This could lead to more affordable housing, especially in mid segment and luxury categories. Affordable housing, which already enjoys a 1% concessional GST rate without input credit will become even more viable due to lower material costs. According to experts, this will enable developers to pass the savings on to customers.

Especially in tier-2 and tier-3 cities, developers and industry associations like CREDAI see this as a significant chance to resume projects that have been delayed and start new ones. Additionally, they believe that the reform improves investor and buyer confidence by bringing essential clarity and uniformity to tax policy. Although services like contracts will still attract 18% GST, the overall benefits of reduced complexity and better liquidity are expected to outweigh the cost.

Real estate leaders say GST 2.0 will not only make housing more available but also help clear unsold records and improve buyer sentiment. With this improvement, first time buyers may find it easier to plan financially by making home ownership more realistic. In short, GST 2.0 is seen as a positive step that brings into line with the government’s “Housing for All” mission and could reshape the real estate sector with better affordability and growth.