Consumers across various sectors are eager to enjoy the benefits from the reduced goods and services tax (GST) rates effective Monday. However, homebuyers may need to wait a bit longer.
Real estate industry executives have indicated that there is still no clarity on the extent of benefits that will trickle down from cement manufacturers to consumers. Whenever cement prices do decrease, only projects currently in the early stages of construction will reap the rewards.
“We are still awaiting concrete information from cement manufacturers regarding the benefits to be passed on to builders. We expect some impact in the first week of October, after which builders can determine how much construction costs can be reduced,” stated G Ram Reddy, president-elect of the Confederation of Real Estate Developers’ Associations of India. “Projects requiring significant amounts of cement will see cost reductions that can be passed on to homebuyers.”
The government’s recent decision to lower tax rates on essential construction materials such as cement, marble, and granite—following the GST Council’s recommendations—is expected to have positive ramifications for the real estate sector, according to experts.
This change is anticipated to decrease project costs for developers and homebuyers alike, potentially enhancing affordability and accelerating project launches.
“We are optimistic that the cement industry will translate these benefits to the real estate sector, ensuring that customers ultimately see reduced housing costs,” remarked G Hari Babu, national president of the National Real Estate Development Council (NAREDCO). “Should the cement industry decide against passing on these benefits, the real estate sector may seek legal opinions and possibly request government intervention. Our aim is not confrontation but to ensure fair transmission of GST reform benefits to end consumers.”
Construction costs are expected to drop by approximately Rs 1,000 per square meter or 3-5%, and potentially up to 10% in certain situations.
“This advantage can be directly relayed to customers, making residential and commercial projects more affordable. This action will bolster customer confidence and provide the essential momentum for the sector,” stated Hari Babu.
Once the cement industry transfers these benefits, it will inherently reduce project costs, enabling developers to present more competitive pricing. This will better serve customers, enhance affordability, and positively impact the growth of the entire real estate sector.
“Additionally, benefits could also stem from savings on air conditioning installation costs, as many developers provide apartments with AC units included. The savings from GST reductions can now be transferred to buyers,” suggested Harsh Vardhan Bansal, president of NAREDCO Delhi.
