GST Reforms Set to Boost Affordable Housing and Market Growth?

Today’s real estate in India is nigh to the market boom, overcoming the protruded taxes and compliance hurdles. Now it is piled up with a new energy due to the latest overhaul of the Goods and Services Tax (GST). This decisive move has brought optimism to the developer, buyers, and investors’ alike promising transparency, affordability, and accelerated growth for this industry.

For years, multiple layers of indirect taxes made property buying confusing and often costlier for homebuyers. Developers struggled with input tax credits, compliance ambiguity, and cascading tax structures that inflated costs. The overall objective of the GST reform is aimed at getting ahead of this array. The government has made a significant move towards making property deals cleaner and more consumer-friendly by lowering tax rates, reducing compliance, and assuring smooth credit flow.

The real estate marketplace will reap greatly from this change. First-time homebuyers are going to find homes more affordable thanks to the new structure, which decreases the tax load on properties yet under construction. It could perhaps provide the much-needed ignition to close the housing gap, considering India's surging urban population and growing need for affordable homes.

For developers, the overhaul means reduced project costs and faster completion timelines. Eliminating tax-related delays allows them to focus on delivery and quality. Investors are also likely to find themselves more confident because an improved tax system assures higher profits and reduces risks. Significantly, this overhaul is in line with the government's overarching goal of "Housing for Everyone." GST is encouraging the industry to become more structured by reducing undetected costs and removing red tape.

The ripple effects extend far beyond housing. To be sure, the revised taxation is expected to support retail infrastructure, co-working spaces, and commercial real estate. The restructured GST framework will serve as the establishment for sustained urban growth as cities grow and companies require top-notch infrastructure.

While challenges such as policy execution and state-level alignment remain, the intent is clear: to restore trust, revive demand, and unlock growth. If momentum is maintained, the real estate sector could see its most robust decade yet—one where affordability meets aspiration, and transparency drives transformation.

In short, the GST reform is a growth engine in the making, transforming the Indian real estate sector into one that is more inclusive and poised for the future.

What industry leaders say about the impact of GST reforms?

Prashant Sharma, President, NAREDCO Maharashtra, said, “NAREDCO Maharashtra welcomes the GST slab rationalization rolled out effective September 22, 2025. Bringing essential construction materials—particularly cement—from 28% down to 18%, and materials like granite and sand-lime bricks to 5%, delivers significant cost relief across the construction value chain. This reduction eases input costs, improves project feasibility, and allows developers to pass savings on to homebuyers—especially in the affordable housing segment. Announced during the festive season, this move not only uplifts consumer sentiment but also aligns with the Government’s 'Housing for All' mission.”

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory, said, “The shift to a two-slab GST regime (5% and 18%) coupled with the reduction on key inputs is a welcome structural reform. Simplified taxation not only streamlines compliance, but enables faster project execution. For buyers, this could translate into more accessible pricing and improved transparency. The timing is strategic—just ahead of the festival season—setting the stage for renewed buyer interest and a healthier real estate cycle.”

Vikas Jain, CEO, Labdhi Lifestyle & President, NAREDCO Maharashtra NextGen said, “The GST rationalization is a landmark move by the Government. The reduction in GST on construction materials will help ease the cost pressures on developers, especially in affordable and mid-segment housing. Simplifying tax slabs also brings much-needed clarity and predictability—essential for innovation in design, sustainable developments, and faster deliveries. If suppliers pass on these savings, homebuyers stand to benefit considerably.”

Navin Makhija, Managing Director, The Wadhwa Group, said, “The GST reform is not just a tax tweak—it’s a strategic stimulus for the entire economy. Lower GST on cement and other finishing materials will help reduce construction costs, enabling developers to pass on the benefits to homebuyers. Reduction of GST on almost 80% of the products will leave a greater spending power in the hands of consumers, their ability to buy and borrow improves, which will naturally fuel housing demand and the economy in general. This reform is well-timed to boost sentiment and drive deeper housing penetration across emerging micro-markets.”

Shraddha Kedia-Agarwal, Director, Transcon Developers, said, “This rationalization of GST is a milestone decision that eases cost burdens for developers and promises relief for homebuyers. With construction costs shrinking, there’s scope to reimagine offerings—perhaps through more thoughtfully priced units or upgraded amenities that maintain affordability. Crucially, the simplification assures buyers about transparency in overall tax burdens, which can restore trust and strengthen market sentiment.”