GST Cuts on Cement, Steel, Tiles & Paints: Affordable Housing and Construction Costs Drop in India 2025

Sep 4, 2025

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in Economic News, Finance and Accounting

The government’s recent GST reform is being hailed as one of the most impactful tax changes for India’s real estate sector. By reducing GST rates on cement and other construction materials, the cost of building homes is set to decline significantly. This move comes at a crucial time when the country is focusing on affordable housing, urban development, and infrastructure expansion.

📉 GST Cuts on Cement and Building Materials

One of the biggest highlights of the reform is the reduction of GST on cement from 28% to 18%, along with cuts on other construction essentials like steel, tiles, and sanitaryware.

✅ GST Rate Comparison Table

Material	Old GST Rate	New GST Rate	Impact
Cement	28%	18%	Saves ~₹30 per bag, reduces housing cost by 2–3%
Steel & Iron Products	18%	5%	Big cost reduction for structural works
Tiles & Sanitaryware	18%	5%	Affordable finishes for middle-income housing
Paints & Coatings	18%	5%	Brings down interior finishing cost
Overall Construction	—	—	Estimated 2–4% fall in total home cost

🏗️ Impact on Affordable Housing

The affordable housing segment is expected to be the biggest beneficiary:

🏘️ Lower raw material costs mean reduced construction expenses.
📉 Developers can cut home prices by 2–4%, making projects more attractive.
⏳ Faster project rollouts, as builders can manage budgets better.
🎉 Increased demand during festive seasons due to higher affordability.

📊 How GST Cuts Help Buyers

Benefit for Buyers	Explanation
Lower Home Prices	Reduced material costs allow developers to pass savings.
More Project Launches	Developers will revive stalled or new projects.
Affordable Financing	Combined with cheaper housing, EMIs become easier.
Improved Housing Supply	Increased activity in affordable housing sector.

🔑 Benefits for Developers

Improved profit margins or ability to pass benefits to buyers.
Stronger sales velocity due to better affordability.
Enhanced confidence among investors and lenders.
Opportunity to expand in tier-2 and tier-3 cities where demand is growing.

🌍 Wider Economic Impact

The GST cuts are expected to:

Boost cement and steel demand, strengthening manufacturing.
Revive real estate and allied industries like paints, fittings, tiles.
Generate more jobs in construction, which is India’s second-largest employer.
Support the government’s “Housing for All” and infrastructure development goals.

🎯 Final Thoughts

The GST cuts on cement and construction materials are more than just tax changes—they could be a game-changer for India’s housing market. By reducing costs, boosting affordability, and reviving stalled projects, this reform is poised to give a much-needed push to the affordable housing segment.

With festive demand around the corner, buyers can expect better deals, lower prices, and more housing options—making now the perfect time to invest in a new home.