The Group of Ministers (GoM) on GST rationalisation has approved the Centre’s proposal to simplify the Goods and Services Tax (GST) into two slabs of 5% and 18%, removing the 12% and 28% rates.
The move is part of the government’s broader GST reform plan announced on August 15, which focuses on structural reforms, rate rationalisation, and easing compliance for taxpayers.
Industry experts say the simplification could have a notable impact on housing prices and buyer sentiment.
An industry expert described the reform as “a transformative step for Indian real estate” that could improve pricing efficiency and transparency, ultimately boosting buyer confidence and accelerating sales.
Another industry expert said that while developers will continue to pay 18% GST on contract services, the overall market benefits are clear.
“Improved liquidity, streamlined compliance, and enhanced investor and homebuyer sentiment are undeniable,” he said, noting that a rational tax framework fosters long-term confidence and demand in the sector.
Another industry expert, highlighted the potential effect on affordability, pointing out that lower input tax for developers could reduce project costs and make housing inventory more accessible to buyers.
“By bringing down overall project costs, this decision can unlock demand and improve buyer sentiment,” he said.
Another industry expert added that the simplified structure “significantly reduces developer input tax costs, making housing projects more affordable,” which could ease the financial burden on buyers, boost demand, and accelerate inventory clearance.
An tax expert emphasised the regulatory clarity the reform brings, strengthening transparency under the Real Estate (Regulation and Development) Act (RERA) and helping developers, financial institutions, and homebuyers navigate the sector more efficiently.
What it means for buyers?
Analysts say the two-slab GST system could translate into savings for homebuyers. Projects previously taxed at 12% could now see costs fall, potentially lowering the overall purchase price by several percentage points depending on the project size.
Experts believe this could stimulate demand in both residential and commercial real estate, improve market liquidity, and make housing more accessible to first-time buyers and middle-income families.
