He notes that lower tax burdens will ease budgeting pressures for developers, enhance cash flows, and boost buyer confidence—particularly in metro markets.
While affordable housing remains largely unaffected due to already lower GST rates, the mid-segment is likely to witness stronger demand and faster project execution in the months ahead. Edited Excerpts –
Q) What kind of impact do you see post-GST rate rationalisation as the council cuts rates on cement and material?
A) Project delays occur due to the fluctuating price of raw materials that disrupts budgeting and cash flow, but with the reduction of tax on cement, which is foundational for commercial and residential projects, we experience a relief in budgeting pressures.
Moreover, with the tax on finishing and structural materials like granite and limestone going down, the purchasing power of builders will improve, and this is significantly advantageous for buyers as well as developers, especially in metro cities.
Q) How quickly are developers likely to reflect these cost savings in pricing for homebuyers—especially in ongoing projects still under older contracts?
A) We cannot expect an immediate drop. The benefits will be reflected in the new projects because the existing projects are already bound by agreements.
Q) With GST on cement cut from 28% to 18%, and on materials like marble, granite, and bricks reduced from 12% to 5%, how much can average construction costs realistically drop?
A) Affordable housing projects would not be impacted much, given that their GST charges are already at 1%. In other projects, the cost reduction can be less than 4%.
But the luxury homes will see a dramatic increase as the GST rate on imported materials is increased.
Q) Which housing segments are likely to benefit the most?
A) The mid-size housing segments will benefit the most from the GST rate cuts. We shall see an enhanced market confidence among home buyers and a surge in demand. Builders will have better cash flow, which shall further add to the win-win situation.
Q) When will the new GST rates realistically start reflecting in new tender negotiations and developer cost models?
A) They shall start reflecting once the rationalised rates are applied, i.e., after September 22, 2025. However, contractors and developers shall start preparing their propositions in advance to ensure seamless adoption of the new rates.
Q) Could these rate cuts invigorate new project launches and accelerate housing supply in key urban markets?
A) The GST cuts have reduced the raw material costs by a good margin, which will certainly boost urban development.
The buyers will find housing more affordable, while builders can have greater availability of credit, which shall increase demand and boost project completion speed. Builders will also be able to take projects in hand with enhanced liquidity.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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