The Indian government is set to roll out its "Next-Gen GST Reforms" on Monday, September 22, 2025, marking one of the most significant overhauls of the Goods and Services Tax since its launch in 2017.
Approved by the GST Council under the leadership of Finance Minister Nirmala Sitharaman, these reforms simplify the tax structure and aim to make compliance easier, while giving a boost to key sectors of the economy, particularly real estate.
The new structure reduces the four-tier GST rate system—5%, 12%, 18%, and 28%—into a simplified two-tier system with 5% (merit rate) and 18% (standard rate), while retaining a 40% special rate for sin and luxury goods.
The real estate sector is set to emerge as one of the biggest beneficiaries of GST 2.0. Industry experts predict the reforms will:
Reduce construction costs by 3–5%.
Boost housing demand across affordable, mid-segment, and luxury categories.
Improve project viability and profitability.
Attract more domestic and international institutional investors.
A major contributor to this expected relief is the reduction of GST on key materials like cement, which will now attract only 18% GST instead of 28%.
Affordable Housing – 1% GST (excluding input tax credit)
Non-Affordable Housing – 5% GST (excluding input tax credit)
12% GST (with input tax credit)
Ready-to-move-in homes with a completion certificate
Resale properties
Sale of land
For homebuyers, the reforms are expected to reduce property prices by 1–1.5% due to lower construction costs. This will make housing more attainable, especially in the affordable and mid-income segments. The lower GST on cement and other building materials will directly impact cost savings, which developers are expected to pass on to end-users.
For developers, GST 2.0 brings cost efficiency and transparency. Key benefits include:
Reduced GST on construction inputs like cement, steel, tiles, and fittings.
Input Tax Credit (ITC): Developers can claim credit for taxes paid on materials and services such as architecture, engineering, and raw materials.
Stronger profit margins without passing on higher costs to buyers.
By streamlining compliance and reducing costs, GST 2.0 is expected to enhance liquidity, improve cash flows, and strengthen project execution timelines.
The revised GST framework consolidates multiple state-level taxes into a single national structure, minimizing opportunities for tax evasion. This unified approach is not only reducing cash-based transactions but also strengthening buyer trust and improving investor confidence. With greater transparency, India’s real estate sector is likely to see a rise in FDI inflows and sustained growth.
The introduction of GST 2.0 represents a transformative moment for India’s real estate sector. By simplifying the tax structure, cutting construction costs, and making housing more affordable, the reforms are set to benefit both buyers and developers.
While challenges such as compliance and implementation remain, the two-slab GST system is widely seen as a growth catalyst, ushering in a more transparent, stable, and investor-friendly real estate market. For homebuyers, lower prices and increased affordability are key takeaways, while for developers, the reforms offer improved profitability and confidence in long-term project planning.