“Just wait for a couple of weeks,” Sunita advised her husband.
Anirban, Sunita’s husband, was surprised.
“What is going to change in 2 weeks?” he asked incredulously.
“A lot is going to change. Especially, the apartment we are planning to buy. Even the cost of interiors for the new home will reduce.”
“A rare occasion when prices will come down,” emphasized Sunita.
Sunita was right; a massive reduction in the GST rates will bring down property prices. And it will take effect in just 2 weeks, from September 22, 2025.
This was music to the ears of all homebuyers when the central Finance Minister, Mrs. Nirmala Sitharaman, announced the GST rate reduction.
This is especially significant for Kolkata, as it will be applicable before Durga Puja.
However, will it be a considerable reduction that will help homebuyers?
Let’s find out.
Will It Really Help Homebuyers?
Homebuyers will get some benefit because the GST on building materials is set to decrease substantially.
Let’s dive into the details and understand the impact.
In India, construction materials represent about 40% of the total cost. Cement is roughly 16-20% of the materials cost. GST on cement (as well as TMT bars, fasteners, and binding wires) will come down from 28% to 18%, a 10% decrease.
A 10% reduction in GST on cement will result in a reduction of approximately ₹16 per sq. ft. in construction costs.
Will it translate into meaningful savings for the homebuyers?
Not really.
Homebuyers can save a minuscule amount ranging from ₹12,000 on a ₹50 lakh apartment to ₹18,000 on a ₹90 lakh apartment. However, if you consider GST reduction on other building materials, tax savings will be a bit higher.
For developers building under the PMAY scheme, every percentage point saved on construction costs means more families can afford homes.
Cheaper materials don’t just mean cheaper homes. They mean more homes get built. More construction jobs are created. More families move from rent to ownership.
There is also another angle that nobody is considering right now.
Will It Boost Affordable Housing?
Clearly, the reduction in GST rates will bring down the cost of housing. But it is doubtful whether it will boost affordable housing.
On a ₹45 lakh apartment, the price reduction is only ₹10,800 due to the GST reduction on cement.
The amount is not really a major deciding factor for homebuyers. Therefore, the effect of the GST reduction will not be a needle-mover.
However, developers can pass on reduced input costs to buyers, offering homes at lower prices, especially in the affordable and mid-income segments.
However, there is another factor that will also help homebuyers save some money.
What is this factor?
Home Appliances Will Get Cheaper
While GST rate reduction is expected to bring down the cost of homes, it will also lessen the cost of home appliances.
This is significant, as homebuyers spend a good amount on home decor after they buy a new home.
With effect from September 22, 2025, GST on key consumer electronics like TVs, air conditioners, and refrigerators will be reduced from 28% to 18%. This 10 percentage point reduction translates into substantial savings for middle-class families. ACs, TVs, fridges, and washing machines will cost less, boosting savings for middle-class homebuyers.
For a typical home decoration where families might spend ₹2-3 lakhs on appliances, this GST cut could save them ₹20,000-30,000 directly at the point of purchase.
There is also a convenient rate rationalization for furniture.
While most standard furniture (wooden, metal, plastic, upholstered, modular) will continue to be taxed at 18% GST, handicraft and handmade furniture will attract only 5% GST. These will include bamboo, cane, metal, and wooden handcrafted items (tables, racks, almirahs, stools, partitions, cradles, swings, baby chairs).
Luxury and modular furniture previously taxed at 28% will now generally fall under 18%.
Planning to buy a car/bike? Wait for a few days.
Taxes on cars and motorbikes (except high-end luxury cars and bikes) will be reduced to 18% from 28%.
Summing Up
GST rate reduction will bring some festive cheer to homebuyers, developers, construction workers, and manufacturers, although the effect will not be substantial.
The simplified two-slab GST structure (5% and 18%) enhances transparency, compliance, and overall efficiency in the real estate market.
This is the right time to select your dream home so that you can buy it in the festive season.
