State Real Estate Sector Applauds GST Reform, Highlights Concerns

Speedy Summary

• GST Revision: The Union government’s GST 2.0 reduces the GST rate on cement from 28% to 18%, aiming to lower construction costs.
• Concerns Expressed: Real estate players in Tamil Nadu, including representatives from credai Tamil Nadu and Credai Chennai, noted that some major sector issues remain unaddressed.

– Lack of provisions addressing Input Tax Credit (ITC) across the real estate value chain continues to cause cascading tax effects, increasing project costs and affecting affordability.
– No specific measures introduced for affordable housing, despite long-standing requests.
– Double taxation concerns persist for home buyers as apartments are taxed at 5% GST without ITC benefits.

• Economic Impact Observations:

– Industry leaders foresee marginal improvements in construction cost due to the reduced cement rates but expect limited direct impact on apartment prices.
– Reduced GST rates on household items may boost disposable income among consumers, possibly driving housing demand.

Indian opinion Analysis

The reduction in GST rates on cement seems a positive step that could theoretically benefit construction pricing.However, industry stakeholders argue this alone is insufficient without simultaneous reforms addressing broader systemic challenges such as Input Tax Credit availability and affordability-focused policies. These unresolved issues could limit benefits reaching homebuyers or translating into increased housing supply.

The lack of targeted measures for affordable housing is particularly significant because this sector supports first-time buyers and has broader economic implications through employment generation. additionally, concerns over double taxation suggest a need for structural changes within the tax framework to prevent unnecessary cost burdens on homebuyers.While consumer spending might increase slightly due to lower household item taxes under GST revisions, its potential uplift in real-estate demand will depend heavily on affordability factors being addressed holistically by policymakers.

published September 05, 2025 | Read more