September 5, 2025: The real estate industry has broadly welcomed the Goods and Services Tax (GST) Council’s decision to slash tax rates on key construction inputs, though experts caution the move will not ease home prices for buyers.
At its meeting on Wednesday, the Council announced that GST on cement has been reduced from 28% to 18%, while sand-lime bricks and stone inlay work will now attract 5% instead of 12%. Cement remains one of the most significant cost drivers in housing construction, making the cut a notable development for developers.
However, industry analysts point out that the benefit will not reach end-users, as developers are barred from availing input tax credits (ITC) on residential projects. As a result, the tax relief will largely strengthen developer margins rather than translate into reduced property prices.
“The direct impact on overall construction costs will be marginal since ITC is still unavailable for residential projects. Clarity is also awaited on affordable housing incentives, which are critical to driving first-time home ownership in the Mumbai Metropolitan Region (MMR),” said Rushi Mehta, secretary, CREDAI-MCHI.
Dr Samantak Das, chief economist and head of research at JLL India, estimated the cost benefit to be between 1% and 1.5%, depending on project stage and category. Developers privately admit that the savings will likely be absorbed by rising operational costs, with one Mumbai-based builder stating that the 2%-3% margin gain would support working capital rather than reduce prices.
Chief Minister Devendra Fadnavis also raised the issue at CREDAI-MCHI’s ‘Change of Guard Ceremony 2025’, remarking that despite reduced premiums, infrastructure upgrades, and policy support, home prices have continued to climb instead of falling.
Source: Hindustan Times
