GST Rate Rationalisation_ 2025

1. GST Rate Rationalisation: A Game-Changer for India’s Real Estate and Construction Sector The real estate and construction sector in India has long been among the most affected under the Goods and Services Tax (GST) regime since its rollout in 2017. Developers, contractors, and homebuyers have consistently highlighted how high tax slabs on essential materials inflated housing costs and slowed infrastructure growth. The government’s recent rationalisation of GST rates marks a major shift. By reducing taxes on key inputs such as cement, marble, granite, and job work for bricks, project costs are set to fall — boosting demand, affordability, and employment across the ecosystem. Why GST Rationalisation Matters Real estate contributes nearly 7% to India’s GDP and is the second-largest employment generator after agriculture. Yet, high input costs and a complex tax structure have constrained growth for years. Earlier, most construction materials attracted multiple indirect taxes like excise duty, VAT, and entry tax. Under GST, many materials were pushed into the 28% bracket, driving up project costs. The revised GST rates aim to correct this imbalance by: ● Lowering construction expenses for developers. ● Improving housing affordability. ● Making government infrastructure projects more cost-efficient. ● Stimulating demand in manufacturing, logistics, and allied sectors. GST Cut on Cement Cement forms the backbone of construction — about 15–20% of total building costs. Previously taxed at 28%, it was one of the biggest contributors to project inflation.

2. ● Old GST rate: 28% ● New GST rate: 18% Impact: ● Lower project costs: Affordable homes become more viable. ● Boost for housing schemes: Especially under Pradhan Mantri Awas Yojana (Urban & Grameen). ● Job creation: Higher demand benefits cement manufacturing, logistics, and mining. ● Infrastructure push: Reduced costs free up funds for large-scale public projects. GST Cut on Marble and Granite Blocks India is a global leader in natural stone production, with Rajasthan, Gujarat, Karnataka, and Andhra Pradesh leading output. ● Old GST rate: 12% ● New GST rate: 5% Impact: ● Affordable interiors: Makes premium finishes accessible to younger buyers. ● Support for local industry: Enhances competitiveness of Indian stone producers. ● Job protection: Sustains employment in rural mining and processing clusters. GST Cut on Brick Job Work Bricks remain the foundation of India’s rural and semi-urban construction. ● Old GST rate: 12%

3. ● New GST rate: 5% Impact: ● Cheaper rural housing. ● Relief for MSMEs: Reduced tax burden on small brick kiln owners. ● Alignment with affordable housing goals. Broader Implications for Real Estate For Developers: ● Reduced input costs and improved cash flow. ● Easier compliance with affordable housing criteria (≤60 sq. m area, ≤₹45 lakh value). For Homebuyers: ● Lower property prices, especially in the mid- and affordable segments. ● Cheaper interior finishes and better value for money. For Government Schemes: ● Cost-effective execution of PMAY, Smart Cities Mission, and other infrastructure projects. For the Economy: ● Stronger job growth in construction, logistics, and manufacturing. ● Positive ripple effects on allied sectors like steel, paints, and tiles. Challenges Ahead

4. Despite these gains, some issues remain: ● Input Tax Credit (ITC) restrictions continue to affect developers. ● Land and stamp duty remain outside GST, keeping prices elevated. ● Compliance hurdles persist for smaller manufacturers. ● Need for oversight to ensure savings are passed on to homebuyers. Conclusion The revised GST rates mark a landmark reform for India’s construction and housing ecosystem. By lowering taxes on vital inputs, the government has addressed long-standing demands of builders and buyers alike. This move is more than a tax cut — it’s a strategic push to enhance housing affordability, spur employment, and accelerate infrastructure growth. As India moves toward its $5 trillion economy goal, rationalised GST policies will continue to play a pivotal role in shaping the nation’s real estate and development landscape.