The new Goods and Services Tax (GST) regime, effective from September 22, has reignited hopes of making housing more affordable for buyers. While the tax overhaul promises to simplify levies and lower costs across industries, experts caution that real estate may take longer to reflect tangible benefits.

With land excluded from GST and construction inputs taxed at varying rates, developers are still recalibrating project costs and tax credits. As a result, any relief for homebuyers is expected to emerge gradually rather than immediately.

Industry observers point out that nearly half the cost of a residential project is attributed to land, which remains outside the purview of GST. The remaining construction costs—comprising materials like cement, steel, tiles and other inputs—are subject to varying tax rates, making the impact of the new regime less straightforward.

“Unlike consumer goods, the pricing dynamics in real estate are layered. Developers need time to reassess how input costs align under the new GST structure,” said a senior executive at a Delhi-based realty firm. “Only after this evaluation can they determine whether and how much of the benefit can be passed on to buyers,” he said.

Developers are currently in the process of recalculating project budgets and tax liabilities under the new rules. This includes assessing how input tax credits and revised rates affect overall cost structures.

Experts believe that any meaningful reduction in property prices will depend on how efficiently these adjustments are implemented and whether developers choose to absorb or transfer the benefits.

Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE, said that GST reforms are expected to play a pivotal role in stimulating demand in the country, especially ahead of the festive season. The impact may be felt immediately in consumer-facing sectors like automobiles and FMCG.

“In real estate, the input prices are likely to go down for developers. For buyers, it may take some time before the benefit reaches them due to relatively longer gestation period. The overall GST cuts are likely to generate a positive sentiment among buyers and may have a ripple effect on real estate, especially retail and industrial & logistics,” he said.

As festive season sales pick up, developers may continue offering flexible payment plans and limited-time incentives to keep sales momentum going but whether the GST overhaul translates into long-term affordability remains to be seen.

Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd., said that specifically, on the possible impact of the GST rate cut on homes, there has been no change in the GST rate of the final product.

“However, there has been a reduction of GST on cement from 28 percent to 18 percent, and on a few other building materials like granite and marble blocks, among others. If cement and marble companies pass on the benefit to developers, then our cost of construction will definitely come down. In such a scenario, we will be able to provide relief to homebuyers,” he said.

Market observers said that for now, prospective homebuyers might have to temper expectations. “It’s premature to expect immediate price drops. The sector needs a few months to stabilize under the new regime,” said a tax consultant specializing in real estate.