GST on different types of housing

The tax rates on property transactions have not changed. What remains in force is a clear three-tier structure:

• Affordable Housing: 1% GST
  Applies to homes priced up to ₹45 lakh, with a carpet area of 60 sq. m in metro cities (Mumbai, Delhi-NCR, Pune, Bengaluru, Chennai, Hyderabad, Kolkata) and 90 sq. m in non-metros.
• Other Under-construction Homes (mid-income and luxury): 5% GST
  Applies to all residential projects outside the affordable definition. Whether a flat costs ₹60 lakh or ₹6 crore, the rate remains 5%.
• Completed, Ready-to-Move Homes: Exempt from GST
  Once a project has received its Occupancy Certificate (OC), no GST can be levied. However, buyers still need to pay stamp duty and registration charges as per state laws.

Material relief, but will it reach buyers?

While property tax rates remain unchanged, the GST Council has slashed cement duty from 28% to 18% and reduced marble, granite, and stone to 5%. Construction costs are expected to fall by 3.5–4.5%. Developers may benefit, but whether the cost savings are passed on to homebuyers remains to be seen.

Why clarity matters

With multiple rates and conditions, GST on homes often confuses buyers. Affordable buyers pay just 1%, luxury buyers pay 5%, and ready properties attract none. For buyers planning their next move, being aware of these distinctions can mean big savings and fewer surprises.

Also Read: 18% GST on residential rental to impact rental real estate

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No change in property tax rates
For homebuyers, the tax burden on property remains the same. Affordable housing continues at 1% GST, under-construction projects at 5%, and completed properties remain exempt. This offers much-needed stability and avoids confusion for buyers planning their purchase.

Construction material becomes cheaper
The big relief is on construction inputs:

• Cement: GST slashed from 28% to 18% (accounts for 25–30% of construction costs).
• Marble, granite, stone bricks: Reduced from 12% to 5%.
• Steel: Remains unchanged at 18%.

These changes are expected to lower overall construction costs by 3.5–4.5%, improving project viability and potentially enhancing affordability if developers pass on the benefits.

Impact on housing categories

• Affordable and mid-income housing: Likely to benefit the most, with lower input costs encouraging developers to launch new projects.
• Premium housing: Reduction in marble and granite GST will particularly support cost efficiency here.
• Homebuyers: With no tax hikes and potential cost savings, buying decisions are unlikely to be deferred.

Overall, the reforms are being seen as a marginally positive step for the real estate sector—especially if the savings get shared with buyers.

Also Read: Homebuyers to Benefit as GST on Cement, Building Materials Cut From Sept 22

The post Cheaper Cement, Stable GST on Homes: What It Means for Homebuyers appeared first on Square Feat India.

Affordable housing, once a backbone of India’s housing market, has seen its launch share shrink from 40% in 2019 to just 12% in H1 2025, while its sales share dropped from 38% to 18%.

What’s Driving Up Construction Costs?

The cost of building homes has risen sharply across India’s top cities. Here’s why:

• Raw Materials: Cement (+30% in 5 years), Steel (+57%), Copper (+91%), Aluminium (+80%).
• Labour: Wages up 150% since 2019 and 25% in the last year alone.
• Other Costs: Higher fuel, compliance, and approval expenses.

City-Wise Construction Costs (2025 Estimates)

Impact on Affordable Housing Buyers

For affordable homebuyers, even a ₹500–800/sq. ft increase means ₹5–8 lakh more on a 1,000 sq. ft flat — a deal-breaker for many families. Developers, facing thin margins, have slowed down launches, leading to an affordable housing crisis.

By contrast, mid-range and luxury projects can absorb cost hikes more easily. Luxury housing buyers are less price-sensitive, while affordable buyers often drop out entirely.

Tariffs & GST: Will They Help or Hurt?

• Tariffs: A proposed 25–50% tariff on steel, aluminium, and imported materials could push costs 2–5% higher, worsening affordability.
• GST Reforms: The government’s move to cut GST on cement from 28% to 18% could reduce home prices by 2–4% in affordable housing and 2–3% in mid-range housing — modest but meaningful relief.

Segment-Specific Trends

• Affordable Housing: From 40% share in 2019 to just 12% in H1 2025 (supply), sales also down to 18%.
• Mid-Range: Buyers stretched but still present; prices rising 9–12% annually.
• Luxury: Least affected — buyers accept higher costs for exclusivity.

What This Means for Homebuyers

For India’s middle- and lower-income households, the report signals a grim reality: affordable housing is fast disappearing. With costs rising and supply shrinking, buying early may be the only way to lock in a home before prices climb further.

The post Affordable Homes Slip Away: Construction Costs Up 40%, Affordable Housing Share Falls to 12% appeared first on Square Feat India.