Realtors have hailed the government’s move to slash GST on cement from 28% to 18%, calling it a landmark reform that will reduce construction costs and boost housing demand.

The reduction, part of a broader GST rationalisation, is expected to lower overall project expenses by up to 5%, with developers and industry bodies saying the benefits will flow to both homebuyers and the real estate sector.

Realtors’ body CREDAI on Thursday said the reduction in GST rate on cement to 18 per cent from 28 per cent would lead to a lowering of construction cost, benefiting consumers and the real estate industry.

Dr. Samantak Das, Chief Economist and Head of Research & REIS, India, JLL, said that in India, developers do not get the full benefit of Input Tax Credit (ITC) in real estate and hence the high GST rate on cement, currently at 28%, adds to the final apartment cost.

“The government’s decision to bring down the GST rate to 18% is a welcome move. The impact of this reduction in rate will vary across different segments of the real estate market. Residential being a strong driver of Indian real estate, understanding of the impact on home price is important. From our ground level data pertaining to live projects, we believe the reduction of home price may range between 1-1.5%, considering various types of residential projects and effective cement cost reduction considering the cascading and base price adjustments,” he said.

This is with the assumption that developers would transmit the entire benefit to the customer. Prima facie, it may appear that there may not be a drastic slash in home prices. However, “for affordable and mid-segment housing, we are likely to see improvements in demand; for premium and luxury properties, the impact on buyers’ affordability would be marginal but the developers can reinvest the savings in the cost of construction to improve quality and amenities,” he said.

From a macro perspective, there would be a positive impact on affordability and sentiments of homebuyers. Developers would gain in terms of easing working capital pressure. The overall savings in cost outflow will be significant and beneficial to all stakeholders of the real estate and construction industry, directly or indirectly.

Rajul Bohra, Partner, JSA Advocates & Solicitors, said, “The GST Council had introduced a two-slab structure of 5% and 18%. The rate cuts on cement to 18% should ease financial burdens for real estate developers and improve affordability. However, the impact on home prices will depend on several factors. Greater clarity is needed on input tax credit for buildings meant for rental use, and it will need to be seen whether benefits will be passed to homebuyers or not.”

Jayesh Rajpurohit, Co-Founder and CEO, Brick & Bolt, said, “This decisive reform will ease infrastructure and construction costs, incentivise plot owners to build both homes and commercial spaces, and advance the mission of Affordable Homes for All. The broader GST rationalisation offers much-needed relief to home buyers and developers alike, encouraging homeownership and driving increased housing demand across the market. In simplifying tax structures and lowering costs, this move will directly benefit the entire real estate ecosystem and support India’s housing growth.”

Ranjeeth Rathod, Managing Director, DRA Homes, said that the GST Council’s decision to reduce rates on cement and other essential construction materials is a welcome and timely reform. By lowering input costs, this move makes homes more affordable for buyers while also boosting overall housing demand, particularly during a period of strong consumer sentiment.

“For the real estate industry, it provides a positive push to accelerate project execution and pass on benefits to customers. Ultimately, this step not only supports the aspirations of families seeking homeownership but also strengthens the government’s broader vision of ‘Housing for Al,” he added.