India’s 56th GST Council meeting has delivered a timely boost to the construction and real estate sector. The GST rate on cement—covering various types such as Portland, aluminous, slag, and super sulphate—has been reduced from 28% to 18%, effective September 22, 2025. This same two-slab structure (5% and 18%) now applies to other building materials including steel, bricks, tiles, sand, granite, and marble, with many of these rates dropping to 5% from the previous 12%.
Industry experts estimate this rationalisation will translate into a 3–5% reduction in overall construction costs. Specifically, cement alone constitutes about 10–12% of total construction expenses; reducing its GST could directly reduce project costs by 5–7%, particularly aiding affordable and mid-income housing segments.
Developers and analysts point out that the reforms will improve project viability, ease cash flow pressures, and potentially accelerate home-buying activity as builders pass on savings—especially during the festive season when buyer sentiment peaks. For affordable housing, where demand has waned in recent years, this could be a revival opportunity if benefits are passed to buyers.
While the sentiment is broadly optimistic, some caution remains. Real estate professionals note that the full benefit depends on developers actually passing on the savings—not all reductions may immediately reach consumers. Additionally, persistent state-level levies, procedural bottlenecks, and higher duties like stamp and registration fees could offset gains in some regions.
In summary, the GST overhaul—by simplifying tax slabs and reducing rates on key construction inputs—offers meaningful relief to the industry. With construction costs likely easing by up to 5%, the stage is set for greater affordability in housing and infrastructure, provided the tax break is effectively transmitted across the value chain.
