GST Rate Cuts on Cement Bring Relief, But Homebuyers See Little Immediate Benefit

GST Rate Cuts on Cement Bring Relief, But Homebuyers See Little

The Indian real estate sector received a boost when the GST Council announced a reduction in tax rates on essential construction materials. While developers welcomed the move, experts cautioned that the relief may not significantly impact homebuyers. The benefits, they argue, will be absorbed by developers rather than reflected in property prices.

GST Cuts Announced

At its latest meeting, the Council lowered GST on cement from 28% to 18%, and on sand-lime bricks and stone inlay work from 12% to 5%. Cement remains one of the most crucial cost components in housing projects, making the reduction a much-anticipated move for developers.

Developers Welcome, Analysts Skeptical

Industry bodies and developers see this as a positive step. However, analysts pointed out that with no input tax credit (ITC) available on residential projects, the cost benefits will remain within the developer community. “The direct impact on construction costs will be marginal since ITC remains unavailable. We also await clarity on affordable housing incentives,” said Rushi Mehta, secretary, CREDAI-MCHI.

Marginal Cost Reductions

According to Dr. Samantak Das, Chief Economist and Head of Research (India) at JLL, the cost benefit is expected to range between 1% and 1.5%, depending on the project stage. “It may not appear as a drastic cut in home prices, though cement cost reductions could have cascading effects across categories,” he explained.

Developers Absorb the Savings

Many developers privately admit that the savings will help balance rising operational expenses rather than reduce prices. “With sales plateauing in recent months, the 2%-3% benefit will likely go toward maintaining working capital and overheads,” said a Mumbai-based builder. For buyers, this means little relief on apartment costs despite headline rate cuts.