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What changed under GST 2.0?
CRISIL’s September 2025 comparison reports that GST on cement fell from 28% to 18%. GST on specified marble and travertine blocks, granite blocks, and sand-lime bricks or stone-inlay items fell from 12% to 5%. Steel remained at 18%. These changes affect selected goods used in construction; they are not a general reduction in the tax rate on property purchases.
| Item | Earlier rate | Rate reported after reform |
|---|---|---|
| Cement | 28% | 18% |
| Steel | 18% | 18% |
| Specified marble and travertine blocks | 12% | 5% |
| Granite blocks | 12% | 5% |
| Specified sand-lime bricks or stone-inlay items | 12% | 5% |
The Ministry of Finance says the goods-rate changes are in Notification No. 9/2025-Central Tax (Rate), dated 17 September 2025. The ministry’s FAQ also identifies Notification No. 10/2025 for exempt goods and Notification No. 14/2025 concerning the special composition scheme for bricks. It says the scheme’s GST rate was unchanged for bricks other than sand-lime bricks. Read the Ministry of Finance FAQ on GST rate changes for the notifications and details.
Why lower input taxes could improve project economics
Construction materials are a significant part of a builder’s costs, but the effect of a tax change depends on what a particular project buys and how it buys it. In its 2025 housing-sector note, CRISIL says construction materials typically account for 50–60% of builders’ overall construction costs, and cement makes up 25–30% of raw-material expenses in its assessment.
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Using its cost analysis, CRISIL estimates that the cement-rate reduction could lower overall construction costs by 3.0–3.5%. It attributes a further 0.5–1.0% estimated reduction to revised rates on marble, granite, and related inputs. Its combined estimate is a 3.5–4.5% decrease, depending on project segment and material mix. These are estimates—not reported realized savings, guaranteed cash released, or automatic cuts to home prices. See CRISIL’s analysis of GST-rate reductions and housing.
Who may benefit—and how much?
Standalone homebuilders
EY India says standalone homebuilders may see more immediate relief when cement and related inputs form a substantial share of their costs. The benefit still depends on the materials used, their purchase terms, and the project’s tax treatment; a lower rate by itself does not establish how much cash a builder will retain.
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Apartment buyers and commercial occupiers
For apartment buyers and commercial occupiers, a lower input tax does not automatically translate into a lower sale price or rent. EY says the outcome depends on developers’ ability and willingness to pass savings through. A developer might instead retain some or all of the cost relief, or use it in commercial negotiations.
Projects with different material mixes
A project that uses more cement or the specified reduced-rate materials has more exposure to the changes than one with a different mix. CRISIL’s estimate varies by project segment for this reason. The specified reductions for marble, granite, sand-lime bricks, and stone-inlay items should not be treated as a reduction for every finish or every kind of brick.
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EY distinguishes developer-led procurement from turnkey contracting. When a developer buys materials directly, the lower rates may create identifiable savings and room to negotiate with suppliers. Under a turnkey contractor model, the effect may be limited: EY says contractors already offset input tax credit against GST on their works-contract output. The actual outcome depends on contract terms and tax treatment, so the same rate change can affect two projects differently. EY summarizes the variation this way: “While the reform is positive, its impact may vary across stakeholders.” (EY India’s analysis of GST 2.0 and real estate.)
Construction-service rates have separate conditions
The lower rates on selected goods are distinct from GST treatment for construction services. CBIC’s rates page lists concessional rates for certain residential construction services, with conditions that include restrictions on input tax credit and an 80% registered-supplier requirement for specified inputs and services. It also describes reverse-charge tax for a shortfall against that threshold and for cement procured from an unregistered supplier.
These conditions can affect project costs and cash-flow planning, but they do not apply identically to every development. The project’s classification, supplier mix, contracts, and applicable notifications matter. For a specific project, consult the relevant notification and a qualified tax adviser; the CBIC GST rates page sets out the listed service rates and conditions.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Did GST 2.0 already make homes cheaper?
The available official statements describe an expected effect, not a measured result. The Ministry of Finance has said that lower GST on cement and construction materials is expected to reduce project costs and accelerate real-estate and infrastructure construction. That expectation does not establish how much developers have saved since the change, whether they have passed savings on, or whether home prices have fallen as a result. Those outcomes are not established by the cited sources. See the Ministry of Finance parliamentary response on GST and construction costs.
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What to check before treating the reform as a saving
- Identify the affected inputs. Check whether the project buys cement and the specific reduced-rate materials; do not assume all construction goods received a lower rate.
- Understand procurement. Establish whether the developer or a turnkey contractor buys the materials, and what the contract says about input costs and tax changes.
- Separate cost relief from buyer benefit. A lower project cost does not by itself prove a lower purchase price. Ask the developer to explain any claimed price adjustment and how it was calculated.
- Check the project’s tax treatment. Concessional construction-service rates can carry credit and supplier conditions, so a project’s effective economics may differ from the headline goods rates.
- Look for documented figures. Treat estimates such as CRISIL’s 3.5–4.5% projected cost reduction as scenario-based analysis, not a promised saving for an individual home.
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