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The forthcoming GST Council meeting is expected to consider major reforms that would simplify the tax structure and potentially reduce costs for the housing sector. The government plans to cut down the four existing GST slabs to two, while also reviewing the possibility of reducing GST on cement from 28% to 18%. Industry experts believe that these changes could lower construction costs, ease compliance, and ultimately benefit homebuyers through more affordable housing. Developers have expressed optimism that these reforms will drive growth in the real estate market.
The GST Council is preparing to deliberate on significant reforms during its meeting earlier this week, with the real estate sector watching closely for possible outcomes. Prime Minister Narendra Modi had indicated during his Independence Day address that next-generation GST reforms would be introduced around Diwali. The government's plan involves merging the four-tier GST system into two slabs by removing the 12% and 28% categories, while retaining the 5% and 18% rates, and creating a 40% slab exclusively for sin goods. Items presently taxed at 28% are expected to shift to 18%, and those in the 12% bracket may move to 5%. Advertisement
Media reports suggest that the Council may also consider reducing the GST on cement, a critical input for the construction sector, by moving it from the 28% bracket to 18%. Such a move could significantly reduce input costs for real estate developers. Industry specialists have long argued that the earlier four-slab structure complicated compliance and inflated costs in sectors including real estate, automobiles, and FMCG.
Developers believe that rationalising GST rates would bring relief to the housing sector by easing administrative burdens, lowering input costs, and making homes more affordable. The anticipated reforms are being viewed as a positive shift at a time when value-driven residential projects require careful planning to align with growing demand.
Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, noted that the housing sector stood to gain substantially from the simplified tax regime. He pointed out that the reduction in cement costs would lower construction expenses, leading to benefits for homebuyers in the long run. He also remarked that these reforms were arriving at a crucial moment, reinforcing resilience in India's housing market as demand for quality housing continues to grow.
With rationalised slabs and lower taxes on key materials such as cement, the industry anticipates a boost in construction activity and demand. Developers and experts alike maintain that these reforms, once implemented, will reinforce growth and enhance transparency, creating a more value-driven and resilient housing market.
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