GST Cut on Cement Sparks Optimism in Realty Sector, CREDAI Calls It a Game-Changer for Affordability

The real estate industry has welcomed the Goods and Services Tax Council’s decision to reduce GST on cement from 28 percent to 18 percent, calling it a landmark reform that could reshape construction economics and housing affordability across India. The Confederation of Real Estate Developers’ Associations of India (CREDAI) hailed the move as a long-awaited relief that will ease cost pressures on developers and potentially benefit homebuyers, especially in the mid-income and affordable housing segments.

 

The announcement, made during the 56th GST Council meeting, also included reductions in GST rates on other key construction materials such as sand-lime bricks, granite blocks, and decorative stone inlay work. While the full impact on end-user pricing remains to be seen, industry leaders believe the reform will stimulate demand, improve margins, and support broader infrastructure growth.

 

Key Highlights of the GST Reform

 

GST on cement reduced from 28 percent to 18 percent, effective September 22, 2025.

 

GST on sand-lime bricks, granite blocks, marble, and stone inlay work cut from 12 percent to 5 percent.

 

CREDAI anticipates up to 5 percent reduction in overall construction costs.

 

Developers expect Rs 12–15 per square foot in direct savings on residential projects.

 

CREDAI’s Perspective and Industry Sentiment

 

Boost to Housing Affordability CREDAI President Shekhar Patel stated that the GST cut on cement is a transformative step that will help bring down raw material costs and improve housing affordability. The association believes this move aligns with the government’s broader goal of making homeownership accessible to a wider population.

 

Relief for Developers Developers across the country have expressed optimism, noting that the reduction in input costs will ease financial strain amid rising operational expenses. Venkatesh Gopalakrishnan of Shapoorji Pallonji Real Estate said the reform would significantly ease project costs and improve affordability for buyers.

 

Limited Pass-Through to Buyers Despite the cost savings, analysts caution that the benefit may not fully reach homebuyers due to restrictions on input tax credit for residential projects. Rushi Mehta of CREDAI-MCHI noted that while margins may improve, price reductions will depend on project stage and developer discretion.

 

Operational and Economic Implications

 

The GST cut is expected to improve cash flows for developers, allowing them to reinvest in new projects and accelerate completion timelines.

 

Builders may use the savings to absorb rising land premiums, labor costs, and compliance expenses, rather than directly reducing sale prices.

 

The reform could also encourage stalled projects to resume, especially in Tier-2 and Tier-3 cities where cost sensitivity is higher.

 

Policy and Tax Structure Reforms

 

The GST Council’s move to simplify the rate structure from four tiers to two (5 percent and 18 percent) is seen as a step toward a more transparent and efficient tax regime.

 

CREDAI praised the process reforms accompanying the rate cuts, which are expected to streamline compliance and improve revenue collections.

 

Industry leaders believe this rationalization will reduce classification disputes and enhance ease of doing business.

 

Future Outlook and Market Impact

 

With the festive season approaching, developers anticipate a surge in demand, particularly in mid-premium and luxury segments.

 

Combined with stable repo rates and improved consumer sentiment, the GST reform could catalyze a strong sales cycle in Q3 and Q4 FY26.

 

CREDAI has urged the government to extend input tax credit eligibility to residential projects to maximize the impact of these reforms.

 

Conclusion

 

The GST reduction on cement and other construction materials marks a pivotal moment for India’s real estate sector. While the immediate impact on home prices may be modest, the long-term benefits in terms of affordability, project viability, and industry confidence are substantial. As developers recalibrate their strategies and buyers weigh new opportunities, the sector stands poised for renewed momentum.

 

Sources: Economic Times, The Week2, Fortune India, MSN News