GST 2.0: Will Lower Cement, Marble & Tile Taxes Make Homes Cheaper?

Sep 9, 2025

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in Economic News, Finance and Accounting

In a significant move to make housing more affordable, the Indian government has announced a reduction in Goods and Services Tax (GST) rates on key construction materials. Effective September 22, 2025, the GST on cement has been slashed from 28% to 18%, while taxes on marble, granite, and tiles have been reduced from 12% to 5%. This reform, part of the government’s GST 2.0 initiative, aims to ease construction costs and provide relief to homebuyers.

🧱 GST Rate Changes on Construction Materials

The revised GST rates are as follows:

Material	Old GST Rate	New GST Rate	Effective Date
Cement	28%	18%	September 22, 2025
Marble & Granite Blocks	12%	5%	September 22, 2025
Tiles (Wall & Flooring)	18%	5%	September 22, 2025
Sand, Bricks, Fly Ash	18%	5%	September 22, 2025

💰 Impact on Construction Costs

These tax reductions are expected to lower overall construction costs by approximately 3% to 5%, as cement constitutes a significant portion of building expenses. For developers, this means reduced input costs, potentially leading to more competitive pricing for homebuyers.

🏡 Benefits for Homebuyers

1. Lower Housing Prices

With reduced construction costs, developers may pass on the savings to consumers, resulting in lower property prices. This is particularly beneficial for the affordable and mid-segment housing markets, where price sensitivity is higher.

2. Enhanced Affordability

The reduction in GST can make homeownership more accessible, especially for first-time buyers and low to middle-income groups. Even a modest decrease in construction costs can lead to significant savings on property purchases.

🏗️ Developer Strategies

Developers are likely to adopt various strategies to leverage the GST cuts:

Festive Discounts: Offering promotional discounts during the festive season to attract buyers.
Flexible Payment Plans: Providing customized payment options to ease financial burdens.
Accelerated Project Timelines: Expediting construction to capitalize on reduced material costs.

📊 Potential Savings for Homebuyers

To illustrate the potential savings, consider the following example:

Construction Cost	Old GST (28%)	New GST (18%)	Savings
₹50,00,000	₹1,40,000	₹90,000	₹50,000
₹75,00,000	₹2,10,000	₹1,35,000	₹75,000
₹1,00,00,000	₹2,80,000	₹1,80,000	₹1,00,000

Note: These figures are illustrative and actual savings may vary based on project specifics.

⚠️ Considerations for Homebuyers

While the GST reductions offer promising benefits, homebuyers should be aware of the following:

State-Level Taxes: Some state-imposed duties, such as stamp duty and registration fees, may offset the savings from GST cuts.
Project Stage: The impact of GST reductions may vary depending on the construction phase of the project.
Developer Practices: Not all developers may immediately pass on the GST benefits to buyers.

Frequently Asked Questions (FAQs)

1. What is GST 2.0 and how does it affect construction materials?

GST 2.0 is the government’s latest overhaul of the Goods and Services Tax. From September 22, 2025, it reduces GST on key construction materials like cement, marble, granite, and tiles, lowering overall construction costs.

2. Which construction materials have seen a GST reduction?

Cement: 28% → 18%
Marble & Granite Blocks: 12% → 5%
Tiles (wall & flooring): 18% → 5%
Sand, Bricks, Fly Ash: 18% → 5%

3. How much can homebuyers save due to the GST cuts?

Savings depend on project size and material usage, but typical reductions can range from 3% to 5% on total construction costs, translating into tens of thousands of rupees for mid-segment homes.

4. Will developers immediately pass on the GST savings to buyers?

Not always. Some developers may pass on the savings, while others may adjust pricing gradually. Buyers should confirm with developers if the reduced GST will reflect in the sale price.

5. Does the GST cut affect stamp duty or registration fees?

No. GST reductions apply only to construction materials. State-level taxes like stamp duty and registration fees remain unchanged.

6. How does the GST cut impact affordable housing?

Lower material costs make mid-segment and affordable homes more financially accessible, potentially increasing homeownership opportunities for first-time buyers and low to middle-income families.

7. Should I wait for the GST benefits before buying a property?

If your project has not started or you are looking for new projects, waiting for post-September 22 purchases may maximize savings. For ongoing or near-completion projects, the savings may be partial or negligible.

8. Will the GST reduction affect ongoing construction projects?

Yes, projects that purchase materials after September 22, 2025 will benefit from the lower GST. Materials purchased before this date remain taxed at the previous rates.

The government’s decision to reduce GST on key construction materials marks a positive step towards making housing more affordable. While the immediate impact on home prices may vary, the long-term benefits are expected to enhance affordability and stimulate the real estate sector. Homebuyers are encouraged to stay informed and consult with developers to understand how these changes may affect their property purchases.