GST September 2025 Reforms: What Does It Mean For India’s Building & Construction Sector

• September 23, 2025
• By: Sanyukta Baijal
• NEWS

The Goods and Services Tax (GST) Council has recently introduced a major set of changes implemented on September 22, 2025. These reforms come with changes which will benefit many sectors including FMCG, appliances, automobiles and more. And the good news is that this reform has something in store for the construction and real-estate industry as well. 

Over the years, GST has been both bridge and hurdle for the real estate and construction industry. Although, it replaced multiple indirect taxes and balanced things, its high rates cement-28% and tiles-18% and other materials often hyped the construction cost. Result? Builders and homeowners frequently raised concerns about limited input tax credit benefits and high rates which made way for GST 2.0 which has recently been implemented. 

What changed for construction and building materials

The Council has moved from the earlier multi-slab complexity toward a far simpler structure: a general standard rate (largely 18%) and a lower merit rate (largely 5%) for essential items. While the higher rates have been reserved for demerit and luxury items.

In simple terms, GST has ben lowered on many essential building materials like cement, tiles and paints. The overall though behind is to reduce the construction costs and provide more transparency in pricing. 

This is going to have a chain impact in the real-estate industry for everyone, including- builders, suppliers, and buyers. The suppliers will reduce prices, whether developers pass on the benefit, and how projects adjust their procurement practices.

Popular construction items

GST on cement has come down to 18% from 28% for all sorts of constructions. Meanwhile, some types of bricks, sand-lime bricks and unprocessed stone blocks have moved down to the lower rate categories. Some flagged at 5%, while others are at 12% depending on tariff classification. 

Tiles, granite, marble and several other basic materials including PVC pipes have seen a cut down of 5% in rate further reducing tax incidence on raw/commodity variants. On the other hand, paints / varnishes and many finish-related items have been reduced to 18% from 28%. Electricals & Wires are now at 18%.

What developers and buyers should do now

• Builders are still using cement they purchased a couple of months ago at the older 28% GST rate. The real savings will only show up after this older stock is used up.
• Aspiring small to medium range buyers will be able to save the most as the construction materials make up a bigger part of their total cost.
• If you're a self builder, then it's advisable to buy the materials on wholesale to get better costs .
• Developers should tell buyers and investors how you’re treating tax savings (pass-through vs margin) to build trust and avoid reputational risk.