CREDAI-MCHI Welcomes Next-Gen GST Reforms as a Boost for Homebuyers

CREDAI-MCHI, the apex body of real estate developers in the Mumbai Metropolitan Region (MMR), wholeheartedly welcomes the landmark Next-Gen GST Reforms announced by the Hon’ble Prime Minister Shri Narendra Modi and approved in the 56th GST Council meeting chaired by Union Finance Minister Smt. Nirmala Sitharaman.

The reforms including rationalizing GST rates to ease the cost burden on essential goods and services while simplifying compliance for businesses is a welcome move.

In particular, the reduction of GST on construction materials such as cement (28 percent to 18 percent) and sand-lime bricks/stone inlay work (12 percent to 5 percent) is expected to provide some relief to developers, though its impact on overall costs will be modest as developers largely procure materials indirectly through vendors who already avail input tax credits.

With construction being a core component of real estate, these reforms will have a marginal impact on construction costs, though certain materials directly purchased by developers such as marble and granite will become cheaper. Homebuyers may see a modest price reduction due to the absence of input tax credits on residential projects. However, the broader GST rationalization across sectors is expected to boost disposable incomes and spur housing demand.

Sukhraj Nahar, President, CREDAI-MCHI said, “CREDAI-MCHI welcomes the government’s initiative to rationalize GST rates on key construction inputs like cement and sand-lime bricks. While the cost relief to developers and homebuyers is modest at this stage, this is a step in the right direction towards improving affordability and enhancing housing demand in MMR. The cost saving due to GST rationalizing will improve disposable incomes levels which may help people invest in their own homes eventually.

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We remain hopeful that the government will soon address the industry’s long-standing request to retain the 1% GST slab on affordable housing while rationalizing the Rs. 45 lakh price cap — a reform that can significantly accelerate Housing for All by 2030.”

Rushi Mehta, Secretary, CREDAI-MCHI added, “The reduction in GST on certain materials is welcome; however, it must be acknowledged that the direct impact on overall construction costs will be marginal since GST input credits remain unavailable for residential projects. That said, the broader GST rationalization across sectors is expected to increase disposable incomes, which in turn can stimulate real estate demand in the medium term. We also await clarity from the government on affordable housing benefits, which remain critical for driving first-time homeownership in MMR.”

Nikunj Sanghavi, Treasurer, CREDAI-MCHI said, “Even a small reduction in costs matters for middle-class homebuyers, especially in under-construction projects. The GST cut on cement and allied inputs provides incremental relief, but we believe the real breakthrough will come when affordable housing thresholds are expanded and the 1 percent GST benefit is extended to a larger spectrum of homebuyers by removing the 45 lacs price threshold.

We remain committed to engaging with policymakers to ensure the sector continues to move towards greater affordability, improved demand, and sustained economic growth.” 

CREDAI-MCHI believes that these reforms will not only bring relief to homebuyers but also generate a positive multiplier effect across allied industries including steel, cement, logistics, and employment. The simplification of GST into a more citizen-friendly two-rate structure (18 percent standard and 5 percent merit) will also streamline compliance, benefitting thousands of small and mid-sized developers in the region.

As the voice of real estate in MMR, CREDAI-MCHI reaffirms its commitment to working alongside the government to realise the vision of Aatmanirbhar Bharat and Housing for All by 2030.