GST 2.0 Cuts Home Building Costs

Home construction in India is set to become more affordable, thanks to the new GST 2.0 reforms. The revised tax structure simplifies rates and reduces costs on key building materials, offering relief to homeowners and developers alike.

The GST Council introduced a two-slab system—5% and 18%—replacing the earlier four-tier structure. This move streamlines taxation and removes confusion over material classifications.

Cement, which previously attracted 28% GST, now falls under the 18% slab. This single change brings down the cost of a 50 kg cement bag by ₹25–₹30, translating to savings of ₹10,000–₹12,000 for a mid-sized home.

• Tiles, paints, and coatings: Now taxed at 18%
• PVC pipes: Reduced to 5%
• Domestic stone and marble: 5% for unpolished blocks
• Electricals and wires: Remain at 18%

For a ₹25 lakh home, estimated savings range from ₹75,000 to ₹1.2 lakh. Larger projects worth ₹1 crore could see relief of ₹3–₹5 lakh. These savings make budgeting more predictable for builders and families.

A 1,500 sq ft home typically uses 400 bags of cement. With the new rates, the cement cost alone drops by over ₹10,000. Add tile and paint reductions, and total savings can exceed ₹40,000.

Not all developers may pass on the benefits immediately. Many hold older stock purchased at higher GST rates. Buyers are advised to check material invoices and negotiate accordingly.

• Review contracts for updated GST rates
• Ask for breakdowns on material costs
• Confirm if builders are using post-GST 2.0 stock

Lower construction costs could make homes more accessible, especially in mid-income and rural segments. Experts expect a rise in demand for budget-friendly housing.

Real estate bodies like NAREDCO welcomed the move, calling it a “progressive step” that supports both developers and buyers. The reforms are expected to revive stalled projects and attract new investments.

The new rates came into effect on September 22, aligning with Navratri. The government dubbed it a “GST bachat utsav,” signaling festive cheer for the housing sector.

GST 2.0 is expected to bring transparency and efficiency to the construction ecosystem. With fewer slabs and clearer rules, compliance becomes easier for small contractors and self-builders.
The GST 2.0 reforms mark a turning point for India’s housing sector. By cutting taxes on essential materials, the government has made home construction more affordable and predictable—benefiting families, builders, and the broader economy.