GST 2.0, launched in September 2025, marks a watershed for Indian real estate, shifting from a four-slab system (5%, 12%, 18%, 28%) to a streamlined two-slab structure—5% (merit goods, including affordable housing and domestic marble) and 18% (standard rate for most goods and services), with luxury and “sin goods” at 40%
The Essentials You Should Know
Key construction materials such as cement, tiles, and paints dropped from 28% to 18%.
Essential items like bricks, sand, select piping, and unpolished domestic marble moved to 5%.
GST2.0 real estate on under-construction affordable homes is 1%, and non-affordable homes is 5% which is unchanged, but cheaper to build.
Developers now benefit from lower construction costs (est. 3–5% reduction), improved compliance, and easier input tax credit computation. The uniform rates mean greater predictability and transparency for homebuyers, investors, and retailers.
Retail Market Transformation
The Indian retail sector, such as shopping malls, high-street complexes, and F&B hubs, has been profoundly impacted by GST 2.0 commercial real estate
Key Changes
Construction and fit-out costs for retail spaces fell by 8–10%, accelerating new projects and renovations.
Retail leasing contracts are now more standardized and transparent, aiding both landlords and tenants.
GST on commercial retail leasing holds steady at 18%, but input credits for developers and retailers mean faster expansion and digital adoption.
Major cities like Mumbai, Delhi, Hyderabad, and Bengaluru are seeing renewed mall launches and refurbishments with reduced costs and upgraded features.
Will GST 2.0 Lower the Burden on Buyers?
Yeah, if builders pass the savings on to buyers. Cutting the GST on main materials cuts building costs right away. If they pass it all on, house prices could drop by around 1–1.5%, mostly for cheaper and mid-priced homes. A lower GST also means better returns and price understanding for business investors and people buying offices.
A bunch of big builders have already said they're dropping prices or giving deals, riding the wave of happy buyers and getting rid of homes that didn't sell from before.
Impact on Hospitality, Co-Living & Rental Housing
Hotel Biz (Hotels, Apartments, Resorts)
Building hotels just got cheaper! Cement, tiles, and fixtures now have lower rates—18% and 5%.
The tax on rooms is still in steps (12%, 18%, 28%), but the input credits make fixing up and adding on easier.
Hotel chains can use these lower costs to redo rooms, start new places in smaller cities, and offer better stuff.
Co-Living & Rentals
This change means more co-living projects, mostly near colleges and tech areas.
Builders can give furnished rentals and housing at good rates.
Taxes on rent and services are what they were, but lower costs mean nicer facilities and more places to rent.
Other Big Changes:
Input Tax Credit (ITC) Made Clear: GST 2.0 gets rid of confusion about rates, so builders can claim ITC easily for almost all materials and services.
Property Tax Made Simple: State property taxes are still around, but GST working together makes following the rules and keeping track of things easier.
Investors Feel Good: A system that's all in one place means fewer sneaky costs, which gets the attention of big investors, REITs, and money from around the world.
GST 2.0 benefits for homebuyers
GST 2.0 benefits for homebuyers is a game changer for Indian homebuyers. It simplifies taxes and lowers the price of building stuff.
Instead of many rates, there are mostly just two: 5% and 18%. Cement, which used to have a 28% tax, is now at 18%. Basic things like bricks and sand are only taxed at 5%. This could drop building costs by 3–5%. If builders share the savings, new homes, mainly the cheaper and mid-range ones, could be 1–1.5% less expensive.
Plus, GST 2.0 doesn't tax home loan fees anymore. This makes buying your first home a bit easier on the wallet. Besides saving money, the new system is open and easy to understand. Buyers can now understand how much they owe in taxes. Everyone is more confident about buying property, which is a win.
Frequently Asked Questions
Q1: How does GST 2.0 change prices for homes still being built?
If GST on stuff like cement goes down, projects cost less. If builders share those savings, buyers might see prices drop a bit, like 1–1.5%.
Q2: What's the GST on homes that are move-in ready?
You still don't pay GST on ready homes. You just pay stamp duty and registration fees.
Q3: Are shops and offices cheaper with GST 2.0?
Yep, lower building costs are good for stores and offices. But GST on buying or selling them is still 12–18%, but you can get some of that back.
Q4: Will rent go down for apartments?
Maybe. If it costs less to fix up the place, landlords might make things nicer and charge less rent, especially in those co-living places.
Q5: What about GST on maintenance and clubhouse fees?
If clubhouse and maintenance fees are over ₹7,500 a month, you still pay 18% GST. The savings mostly come from cheaper upgrades.
Conclusion
GST 2.0 is a big deal for Indian real estate. It's helping to lower building costs, boost retail sales, and make things more open in the housing, office, and hotel areas. If these savings get passed on, buyers could see lower prices. Plus, developers, retailers, and investors will have easier rules to follow and feel more confident in the market.
As things play out, we can expect to see more new projects, better features in properties, and a property market that's more accessible and appealing to investors. This could really push India into a time of real estate growth and opportunity.